Executive Summary. Challenges

Transcription

1 Executive Summary Gainesville Regional Utilities proposed Fiscal Year 2017 capital and operating budget provides a framework to deliver on its mission to provide safe, reliable, competitively priced utility services in an environmentally responsible manner to enhance the quality of life in our community. The budget also supports GRU s vision of Enterprise Resource Planning system integration, which when implemented will provide a communication link throughout its service area a virtual canopy to support smart meters, self healing transmission and distribution lines, and real time data exchange from both sides of the meter. GRU s vision is supported by the adoption of a Continuous Improvement business model, in which organizational culture is shifting as all employees are challenged to re think purpose and processes to strive for excellence. The newly appointed Chief Change Officer is leading the effort to re invent GRU as the nation s preeminent municipal utility. Beyond the aspirational, the FY17 budget continues to increase the competitiveness of GRU services through operational efficiencies and the recommendation of no electric base rate increases for a second straight year. The electric rate recommendation supports the City Commission s goal of rates within one half of one standard deviation above the mean for all Florida electric utilities. Based on the standard industry usage comparison of 1,000 kwh per month, GRU is less than $12 away from meeting this goal. Led by rate relief, GRU chief priorities are maintaining financial strength, maintaining and improving system reliability and improving both customer service and employee engagement. Challenges As with most utilities, GRU will continue to be challenged by ongoing regulatory pressure in all systems. These include additional costs in the electric system associated with increased compliance for North American Electric Reliability Corporation standards and U.S. Environmental Protection Agency rules regulating the disposal of coal combustion residuals. GRU s water and wastewater system have taken on $50 million in debt to meet regulatory requirements for nutrient removal and alternatives to land application of biosolids which have resulted in no new system capacity or revenue enhancement. The projects that account for that capital outlay Paynes Prairie Sheetflow Restoration Project and the Kanapaha Dewatering Facility also require an additional $750,000 in budgeted O&M expenses in FY17. GRU s biggest challenge will be its transformation into a 21st century utility. While GRU already provides a value added service, the organization must reach beyond the meter to provide additional services such as real time pricing, alternative power products, easier access to information and smoother interactions. GRU must also continue to develop toward the private industry model of efficiency. The proposed FY17 budget reflects staff s best efforts to balance the direction of the City Commission and the challenges confronting the utility across all systems. 1

2 Systems Electric Total electric sales through May FY16 are 2.6 percent higher than projected. This increase can be largely attributed to favorable weather conditions. As in FY16, there will be no increase in the revenue requirement, and therefore no recommended rate increases for the electric system in FY17. This can be largely attributed to the implementation of a number of efficiency measures throughout the system. The use of the remaining approximately $5 million in reserves from the Crystal River 3 decommissioning settlement is also a factor in offsetting the 2 percent revenue requirement increase projected during the previous year s budget process. A major budget and operational consideration for the electric system is GRU s purchase power agreement with Gainesville Renewable Energy Center (GREC). Effective mitigation of the GREC contract by keeping the GREC generating facility in cold standby for an extended period of FY16 while optimizing GRU s portfolio of generating assets and purchasing power from other sources has resulted in millions of dollars in cost savings. These savings have been passed on to customers through two Electric Fuel Adjustment rate cuts in FY16, pushing that component of customers bills down to 7 cents per kilowatt hour from 7.8 cents. These reductions have resulted in a total savings of approximately $100 per year for customers using 1,000 kwh per month. Natural Gas The revenue requirement for natural gas will increase 9 percent in FY17 nearly double what was forecast during the FY16 budget process. Projections for gas sales and revenue are approximately 8 percent and 5.7 percent below forecast, respectively, due largely to the mild winter. The increase can also be attributed to higher administrative and general expenses that began in FY16, and the necessary reclassification of capital expenses to operation and maintenance expenses where appropriate as part of the FY17 budgeting process. In February, the Purchased Gas Adjustment rate for residential and nonresidential customers was lowered from 30 cents per therm to 23 cents per therm, resulting in customer cost savings. Based on the projected continuing rise of natural gas market prices, this rate will likely have to be revised in FY17. Staff forecasts a PGA levelization balance of $1.3 million at the close of FY16 and a negative balance by the end of FY17 if the PGA is not revised. Staff is recommending a base rate increase that would result in a net increase of $2.25 for residential customers with usage of 25 therms per month. Even with these adjustments, GRU s natural gas prices remain among the lowest in Florida. 2

3 Water/Wastewater The revenue requirements for the water and wastewater systems will each increase 3 percent in FY17. This is less than the 3.75 percent increase projected for water and 4.85 percent increase projected for wastewater during the FY16 budget process. In the water system, sales and revenue projections are 4.1 percent and 1.5 percent below forecast, respectively. This trend has been consistent over the last several years as customers use less water in response to price signals, watering regulations, weather impacts and conservation messaging. Wastewater sales and revenue projections are 3 percent and 2.2 percent below forecast, respectively. In addition to declining sales, the wastewater system continues to incur expenses related to regulatory compliance, including operation of the biosolids dewatering facility and management expenses related to the Paynes Prairie Sheetflow Restoration Project and Sweetwater Wetlands Park. Staff is recommending residential base rate increases that would result in a combined water and wastewater rate increase of $1.45 for residential customers using 7,000 gallons per month per system. Additionally, under the proposed budget the monthly customer charges for customers with 5/8, 3/4", 1, 1.5 and 2 meters would increase, while the rates for customers with 3 to 10 inch meters would not change. Staff is also recommending revising the multi family rate structure. This rate helps equalize revenue across customer classifications to better recover the cost of providing services to multi unit dwellings. Under the proposed budget, the monthly billing rate for multi family wastewater customers would switch from the winter max method to 95 percent of water use each month. This change which mirrors how GRU charges nonresidential wastewater customers will make billing clearer for customers and will allow for more accurate accounting of billing and revenues. GRUCom GRUCom is the Gainesville area's only all fiber optic network and is providing one gigabit service to select residential GATOR NET locations with plans to expand. The telecommunications market is highly competitive and revenue has flattened over time as prices have become more competitive throughout the industry. Fiber transport and data services continue to be in high demand and wireless carriers continue to increase their data services as customer demand dictates. Network upgrades and additions to wireless towers in Alachua County have GRUCom well positioned to meet customer demand for increased bandwidth. In January, GRUCom was awarded a 10 year contract with the School Board of Alachua County to provide ultra high speed, fiber optic data services to every public school in Alachua County. GRUCom will provide access to data connection speeds up to 800 times faster than what the Federal Communications Commission defines as broadband speed to all public schools in Alachua County. Also, schools in Hawthorne, Archer and Newberry will receive direct access to GRUCom data service for the first time. 3

4 GRUCom s continued expansion is a key factor to achieving GRU s strategic initiatives, specifically the integration of Enterprise Resource Planning for all systems. Maintaining and expanding GRUCom with a model of right sizing and right placing external resources to maximize value to GRU operations simultaneously maximizing value to all GRU customers will effectively transform GRU into one of the most innovative and financially stable utilities in the country. GRUCom s principle value to GRU, and therefore all GRU customers, is as the information technology backbone of both GRU and the City of Gainesville. Summary The chart below illustrates the residential price changes recommended by staff and described above. These changes use the standard industry compares for a residential customer for FY16 and FY17. About 70 percent of customers receive three services (electric, water and wastewater) and about 30 percent receive all four services. System Usage July 2016 Bill Base Rate Change Fuel Change Proposed FY17 Bill Electric 1,000 kwh $ No change $ Gas 25 therms $ $2.25 $ Water 7 kgal $ $0.65 $ Wastewater 7 kgal $ $0.80 $ Total $ $3.70 $0.00 $ July 2016 Electric and Gas bills based on Fuel Adjustment of $0.070/kWh and Purchase Gas Adjustment of $0.23/therm. Proposed FY17 Electric and Gas bills based on Fuel Adjustment of $0.070/kWh and Purchase Gas Adjustment of $0.23/therm. Rate relief, especially for electric customers, remains GRU s key budget driver. GRU is most valuable to customers when financial strength is maximized to increase competitiveness by reducing system revenue requirements, lowering rates and debt levels, and increasing organizational resources. GRU s strategic initiatives are focused on improving workflow processes, eliminating barriers to efficiencies and increasing competitiveness. The FY17 budget includes approximately $28.2 million in additional expenditures ($5.2 million O&M and $23 million capital) for the implementation of a worldclass information technology system. The completion of this project is essential to future financial success and to enhanced customer satisfaction. GRU s peer utilities across Florida and the nation are reporting similar trends with slower sales and growth, increasing fixed costs and the resulting pressure on base rates. Despite these challenges, GRU maintains high ratings and stable outlooks from Fitch, Moody s and Standard & Poor s. This can be attributed in part to the deliberation and care put into the budgeting and ratemaking process. GRU will continue to explore and implement efficiencies, optimize equity to minimize borrowing, and seek new revenue sources to ease upward rate pressure. 4

5 Table of Contents Section A: Budget Overview System Overview... 1 FY17 Revenues... 3 FY17 Expenses and Uses of Net Revenues... 4 Revenues Trend... 5 Expenses Trend... 6 Key Financial Metrics... 7 FY17 Rate Structure Forecasts Section B: Flow of Funds Combined System... 1 Electric System... 2 Water System... 3 Wastewater System... 4 Gas System... 5 GRUCom... 6 Section C: Revenues Electric System... 1 Water System... 3 Wastewater System... 5 Gas System... 7 GRUCom... 9 Section D: Non Labor Fuel... 1 Energy Supply... 3 District Energy... 4 Energy Delivery... 5 Water... 7 Wastewater... 8 GRUCom... 9 Administration Customer Support Services Information Technology Finance Human Resources System Expenditures Debt Service Utility Plant Improvement Fund General Fund Transfer... 18

6 Section E: Labor Combined System... 1 Energy Supply... 5 District Energy... 6 Energy Delivery... 7 Water... 8 Wastewater... 9 GRUCom Administration Customer Support Services Information Technology Finance Human Resources Section F: Capital Projects Electric System... 1 Water System... 4 Wastewater System... 6 Gas System... 8 GRUCom Section G: Financial Reserves and Ratios Reserve Requirements... 1 Total Debt Service Coverage... 2 Fixed Charge Coverage... 3 Equity Ratio... 4 Days Liquidity on Hand... 5 Days Cash on Hand... 6

7 Section A Budget Overview

8 Budget Overview System Overview Electric System The Energy Supply department operates the J.R. Kelly Generating Station with a net summer generation capability of 108 Megawatts (MW), the Deerhaven Generating Station with a total net summer generation capability of 413 MW and the South Energy Center with a net summer capability of 3.5 MW. In addition, the System also has two Power Purchase Agreements (PPA): one for all of the available energy, delivered energy and environmental attributes from a MW biomass fuel generating facility, Gainesville Renewable Energy Center (GREC), located on property leased from GRU and one for the entire output generated from landfill gas derived from the Baseline Landfill in Marion County, which has a net summer capability of 3.7 MW. The total combined generating and PPA resources for GRU are 631 MW. The Energy Delivery department operates 120 miles of 138 Kilovolt (KV) and 230 KV transmission lines, 562 miles of 12 KV overhead distribution lines, 857 miles of 12 KV underground distribution lines, and 10 substations. The Department is also responsible for the construction and maintenance of all GRU owned substations as well as all transmission and distribution infrastructure including: conductors, cables and wires, poles, protection devices, isolating and interrupting devices, voltage regulators, meters, control systems and lighting systems. Water System The Water System is responsible for operating and maintaining the Murphree Water Treatment Plant, which has a treatment capacity of 54 million gallons of water per day (MGD). The plant is responsible for providing safe, reliable, high quality drinking water to customers at acceptable pressures and volumes. The System is also responsible for construction, operation and maintenance of over 1,130 miles of water transmission and distribution mains, as well as the installation and maintenance of water meters, fire hydrants and backflow prevention devices. Wastewater System The Wastewater System operates and maintains the 14.9 MGD treatment facility at Kanapaha Water Reclamation Facility, the 7.5 MGD treatment facility at Main Street Water Reclamation Facility, 168 lift stations, 631 miles of gravity main and 139 miles of associated force main. Responsibilities include pumping, treating and discharging high quality treated effluent that meets federal and state drinking water standards, and providing high quality reclaimed water to residential and business customers primarily for irrigation. The Wastewater System also administers the utility s industrial pretreatment, biosolids, grease and backflow prevention programs. Gas System The Gas System covers approximately 115 square miles and provides service to 30 percent of Alachua County s population. The Energy Delivery Department is responsible for the construction, operation and maintenance of six natural gas gate stations, as well as all transmission and distribution system infrastructure, including 774 miles of pipelines in various sizes and materials, valves, pressure regulators, protection devices, odorant injection systems, meters and control systems. The system also includes a number of propane gas distribution systems operated in developments where natural gas is not yet available. A - 1

9 GRUCom The Telecommunications System, GRUCom, provides transport services utilizing a mile fiber optic network. GRUCom s four basic product lines include Telecommunication (data transport and carrier services), Public Safety Radio, Tower and Colocation Leasing and Internet Access. GRUCom is divided into several operating units, including Business Management, Engineering, Construction, Electronics, Network Operations, and Public Safety Radio System. The GRUCom fiber optic network continues to expand, providing customers with unmatched service and reliability. Through expansion of its product base or affiliation with other service providers to deliver bundled services, GRUCom continues its mission of bringing new communications technologies and services to Gainesville at affordable prices. A - 2

10 FY17 Revenues Dollars in Thousands Budget Overview Water $34, % Wastewater $41, % Gas $14, % GRUCom $11, % Electric $132, % Transfers from/(to) Rate Stabilization $8, % Electric Fuel Revenues $153, % Investment Revenues $1, % Non Utility Revenues $15, % Gas Fuel Revenues $7, % Budget 2016 Projection 2016 Budget 2017 Budget 2018 Revenues: Electric $ 128,192 $ 130,173 $ 132,339 $ 141,096 Water 33,125 33,871 34,378 35,086 Wastewater 41,494 41,352 41,846 42,680 Gas 13,692 13,334 14,987 15,514 GRUCom 11,081 10,983 11,080 11,323 Electric Fuel Revenues 158, , , ,188 Gas Fuel Revenues 8,407 7,432 7,697 11,963 Non Utility Revenues 16,785 22,954 15,173 15,478 Investment Revenues 1,320 1,474 1,649 1,304 Transfers from/(to) Rate Stabilization (4,824) 2,921 8,822 2,330 Total Revenues $ 407,578 $ 412,005 $ 421,951 $ 436,962 A - 3

11 Budget Overview FY17 Expenses and Uses of Net Revenues Dollars in Thousands Fuels $161, % Labor $57, % GFT $35, % UPIF Contribution $46, % Debt Service $56, % Non Labor O&M $63, % Budget 2016 Projection 2016 Budget 2017 Budget 2018 Expenses and Use of Net Revenues: Fuels $ 166,714 $ 154,944 $ 161,675 $ 172,150 Labor 54,178 54,423 57,257 58,642 Non Labor O&M 51,096 62,125 63,463 66,650 Debt Service 56,356 62,094 56,884 56,893 UPIF Contribution 43,778 43,713 46,858 46,466 GFT 35,456 34,706 35,814 36,161 Total Expenses $ 407,578 $ 412,005 $ 421,951 $ 436,962 A - 4

12 Budget Overview Revenues Trend Fiscal Years Ending September , , ,000 $'s (000) 200, ,000 0 Budget 2016 Projection 2016 Budget 2017 Budget 2018 (100,000) Gross Revenues Transfers Fr/(To) Rate Stabilization Fuel Revenues Budget 2016 Projection 2016 Budget 2017 Budget 2018 Utility Operating Revenues Electric $ 128,192 $ 130,173 $ 132,339 $ 141,096 Water 33,125 33,871 34,378 35,086 Wastewater 41,494 41,352 41,846 42,680 Gas 13,692 13,334 14,987 15,514 GRUCom 11,081 10,983 11,080 11,323 Fuel Revenues 166, , , ,151 Non Utility Revenues 16,785 22,954 15,173 15,478 Investment Revenues 1,320 1,474 1,649 1,304 Transfer from/(to) Rate Stabilization (4,824) 2,921 8,822 2,330 Total Revenues $ 407,578 $ 412,005 $ 421,951 $ 436,962 A - 5

13 Budget Overview Expenses Trend Fiscal Years Ending September , , , , ,000 $'s (000) 250, , , ,000 50,000 0 Budget 2016 Projection 2016 Budget 2017 Budget 2018 Fuels Non Fuel Expenses Debt Service UPIF Contribution GFT Budget 2016 Projection 2016 Budget 2017 Budget 2018 Fuels $ 166,714 $ 154,944 $ 161,675 $ 172,150 Labor Operations 32,856 33,411 35,042 36,089 Labor Administrative 21,322 21,012 22,215 22,553 Total Labor 54,178 54,423 57,257 58,642 O&M Operations 31,671 31,816 32,081 34,727 O&M Administrative 19,425 30,309 31,382 31,923 Total O&M 51,096 62,125 63,463 66,650 Total Expenses 271, , , ,442 Debt Service 56,356 62,094 56,884 56,893 UPIF Contribution 43,778 43,713 46,858 46,466 GFT 35,456 34,706 35,814 36,161 Uses of Net Revenues 135, , , ,520 Total Expenses and Uses $ 407,578 $ 412,005 $ 421,951 $ 436,962 A - 6

14 Budget Overview Revenues Combined System 600, ,000 Thousands 400, , , ,000 0 Fiscal Year Gross Revenues Net Revenues Gross Revenues Less Fuels Operations & Maintenance Expenses (O&M) Combined System Thousands 200, , , , , ,000 80,000 60,000 40,000 20,000 0 Fiscal Year O&M Less Fuels Fuel Expense A - 7

15 Budget Overview Funded Reserves vs. Reserve Targets Combined System Thousands 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 Fiscal Year Rate Stabilization Fund Total Reserves Required Utility Plant Improvement Fund (for Reserves) Original Reserve Target Rate Stabilization Transfers Deposits/(Withdrawals) 10, Thousands 5,000 0 (5,000) (10,000) (15,000) 2017 Fiscal Year Positive numbers reflect a deposit into the Rate Stabilization Fund (RSF). This indicates that Utility revenues were greater than expenses, including General Fund Transfer, Debt Service and UPIF contributions. Negative numbers reflect a withdrawal from the Rate Stabilization Fund. This indicates that Utility revenues were less than expenses, including General Fund Transfers, Debt Service and UPIF contributions. RSF activity is projected over the planning horizon to manage rates and mitigate significant pricing variances to customers. A - 8

16 Budget Overview Required UPIF Contribution Combined System Thousands 50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 Fiscal Year The Utility Plant Improvement Fund (UPIF) Contribution is required by the Utilities System Revenue Bond Resolution, As Amended. General Fund Transfers Thousands 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 GFT Fixed Amount 2015 to 2019 Fiscal Year The General Fund Transfer (GFT) represents transfers to the City of Gainesville s General Fund, in total, for all Systems. A - 9

17 Budget Overview Current Annual Debt Service Combined System 70,000 60,000 50,000 Thousands 40,000 30,000 20,000 10,000 0 Fiscal Year Includes Commercial Paper. Excludes future issuances beyond Debt vs. Equity Funding for Capital Thousands 140, , ,000 80,000 60,000 40,000 20, Fiscal Year Debt Equity A - 10

18 Budget Overview FY17 Rate Electric Consumption FY16 Rate FY17 Rate Residential Customer Charge Per Bill $ No Change Residential Tier One (0 850 kwh) $ No Change Residential Tier Two (>850 kwh) $ No Change General Service Non Demand Customer Charge Per Bill $ No Change General Service Non Demand Tier One ( kwh) $ No Change General Service Non Demand Tier Two (over 1500 kwh) $ No Change General Service Demand Customer Charge Per Bill $ No Change General Service Demand Charge Per kw $ 8.50 No Change General Service Energy Charge Per kwh $ No Change Large Power Customer Charge Per Bill $ No Change Large Power Demand Charge Per kw $ 8.50 No Change Large Power Energy Charge Per kwh $ No Change Water Consumption FY16 Rate FY17 Rate Residential Customer Charge (5/8 " & 3/4") Per Bill $ 9.20 $ 9.45 Residential Tier One (0 6 kgals) $ 2.35 $ 2.45 Residential Tier Two (7 20 kgals) $ 3.75 No Change Residential Tier Three (over 20 kgals) $ 6.00 No Change Commercial Customer Charge Per Bill Based on Meter Size Based on Meter Size Commercial All kgals $ 3.85 No Change Multi Family Customer Charge Per Bill Based on Meter Size Based on Meter Size Multi Family All kgals $ 3.45 $ 3.75 Irrigation Residential Customer Charge Per Bill $ 9.20 $ 9.45 Irrigation Residential Tier One (0 12 kgals) $ 3.75 No Change Irrigation Residential Tier Two (over 12 kgals) $ 6.00 No Change Irrigation Commercial Customer Charge Per Bill Based on Meter Size Based on Meter Size Irrigation Commercial All kgals $ No Change Wastewater Consumption FY16 Rate FY17 Rate All Customers Per Bill $ 9.00 $ 9.10 All kgals $ 6.20 $ 6.30 Reclaimed Water Per Bill $ 9.00 $ 9.10 All kgals $ 0.85 $ 0.95 Natural Gas Consumption FY16 Rate FY17 Rate Residential Customer Charge Per Bill $ 9.75 No Change Residential Energy Charge Per Therm $ $ Residential MGP Charge Per Therm $ No Change Small Commercial Customer Charge Per Bill $ No Change Small Commercial Energy Charge Per Therm $ $ Small Commercial MGP Charge Per Therm $ No Change Commercial Customer Charge Per Bill $ No Change Commercial Energy Charge Per Therm $ $ Commercial MGP Charge Per Therm $ No Change Large Commercial Customer Charge Per Bill $ No Change Large Commercial Energy Charge Per Therm $ $ Large Commercial MGP Charge Per Therm $ No Change A - 11

19 Electric Energy Sales MegaWatt hours Residential Non Residential Sales for Resale 2016 Forecast 2,500, CAAGR (1) = 0.85%/yr CAAGR (1) = 0.79%/yr 2,000,000 1,500,000 1,000, , (1) Retail Sales Compound Average Annual Growth Rate Fiscal Year A - 12

20 Electric Customers Residential Non Residential 2016 Forecast 120, , CAAGR (1) = 0.71%/yr CAAGR (1) = 0.85%/yr 80,000 60,000 40,000 20, (1) Compound Average Annual Growth Rate Fiscal Year A - 13

21 Natural Gas Energy Sales Therms Residential Non Residential 2016 Forecast 30,000,000 25,000, CAAGR (1) = 0.27%/yr CAAGR (1) = 0.77%/yr 20,000,000 15,000,000 10,000,000 5,000, (1) Compound Average Annual Growth Rate Fiscal Year A - 14

22 Natural Gas Customers Residential Non Residential 2016 Forecast 45,000 40,000 35, CAAGR (1) = 0.55%/yr CAAGR (1) = 0.99%/yr 30,000 25,000 20,000 15,000 10,000 5, (1) Compound Average Annual Growth Rate Fiscal Year A - 15

23 Water Sales Thousand Gallons (kgal) Residential Non Residential University of Florida 2016 Forecast 10,000,000 9,000, CAAGR (1) = 2.74%/yr CAAGR (1) = 0.96%/yr 8,000,000 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000, (1) Compound Average Annual Growth Rate Fiscal Year A - 16

24 Water Customers Residential Non Residential 2016 Forecast 90,000 75, CAAGR (1) = 0.72%/yr CAAGR (1) = 1.11%/yr 60,000 45,000 30,000 15, (1) Compound Average Annual Growth Rate Fiscal Year A - 17

25 Wastewater Billings Thousand Gallons (kgal) Residential Non Residential 2016 Forecast 7,000,000 6,000, CAAGR (1) = 1.56%/yr CAAGR (1) = 0.88%/yr 5,000,000 4,000,000 3,000,000 2,000,000 1,000, (1) Compound Average Annual Growth Rate Fiscal Year A - 18

26 Wastewater Customers Residential Non Residential 2016 Forecast 80, CAAGR (1) = 0.82%/yr CAAGR (1) = 1.12%/yr 60,000 40,000 20, (1) Compound Average Annual Growth Rate Fiscal Year A - 19

27 Section B Flow of Funds

28 Flow of Funds Combined System Budget 2016 Projection 2016 Budget 2017 Budget 2018 Revenues: Sales Revenue $ 215,842,546 $ 216,267,683 $ 220,732,152 $ 231,367,452 Fuel Adjustment Revenue 158,305, ,511, ,980, ,187,660 PGA Revenue 8,407,472 7,432,106 7,696,897 11,963,422 Surcharge Revenue 8,567,992 8,751,876 9,113,778 9,451,305 Connection Revenue 2,872,892 4,693,639 4,786,121 4,880,359 Interchange Revenue Other Revenue 17,084,923 22,953,505 15,172,622 15,478,171 Interest Income 1,320,303 1,474,448 1,648,550 1,304,030 Rate Stabilization (to)/from (4,824,306) 2,921,153 8,821,839 2,330,380 Total Revenues 407,577, ,005, ,951, ,962,780 O&M Expenses: Native Load Fuel Cost 158,305, ,511, ,980, ,187,660 Interchange Fuel Cost Purchased Gas 8,407,472 7,432,106 7,696,897 11,963,422 Other O&M 105,274, ,548, ,719, ,291,868 Total Expenses 271,987, ,492, ,396, ,442,950 Net Revenues: General 135,589, ,513, ,555, ,519,830 Interchange Total Net Revenues 135,589, ,513, ,555, ,519,830 Uses of Net Revenues: Debt Service (Net of UPIF used for DS) 56,355,741 62,094,259 56,883,881 56,892,725 UPIF 43,778,139 43,713,057 46,858,096 46,466,093 General Fund Transfer 35,456,059 34,706,059 35,814,010 36,161,012 Total Use of Net Revenues 135,589, ,513, ,555, ,519,830 Net Revenue/(Deficit) $ $ $ $ B - 1

29 Flow of Funds Electric System Budget 2016 Projection 2016 Budget 2017 Budget 2018 Revenues: Residential Revenue $ 45,700,464 $ 47,231,132 $ 47,968,381 $ 48,292,570 Residential Rate Change Revenue 965,851 Non Residential Revenue 64,518,143 65,463,724 66,573,688 67,660,151 Non Residential Rate Change Revenue 1,353,203 Other Electric Sales 3,934,461 3,451,926 3,372,509 3,301,911 South Energy Center Revenue 10,845,560 10,834,656 11,122,588 16,002,032 Innovation Square Revenue 182, , , ,000 Fuel Adjustment Revenue 158,305, ,511, ,980, ,187,660 Surcharge Revenue 3,010,596 3,005,335 3,113,562 3,217,223 Interchange Revenue Other Revenue 14,692,706 17,902,438 8,794,042 8,990,521 Interest Income 973, ,739 1,176, ,255 Rate Stabilization (to)/from (2,785,973) 3,041,315 9,813,458 3,084,341 Total Revenues 299,377, ,616, ,105, ,291,718 O&M Expenses: Native Load Fuel Cost 158,305, ,511, ,980, ,187,660 Interchange Fuel Cost Other O&M 61,254,398 68,023,858 70,535,394 73,528,082 Total Expenses 219,560, ,535, ,515, ,715,742 Net Revenues: General 79,817,302 84,081,407 81,590,043 80,575,976 Interchange Total Net Revenues 79,817,302 84,081,407 81,590,043 80,575,976 Uses of Net Revenues: Debt Service (Net of UPIF used for DS) 35,404,469 38,594,782 33,449,414 33,273,557 UPIF 24,734,721 24,734,721 27,046,177 25,860,966 General Fund Transfer 19,678,113 20,751,903 21,094,452 21,441,454 Total Use of Net Revenues 79,817,302 84,081,407 81,590,043 80,575,976 Net Revenue/(Deficit) $ $ $ $ B - 2

30 Flow of Funds Water System Budget 2016 Projection 2016 Budget 2017 Budget 2018 Revenues: Sales of Water $ 27,028,011 $ 28,023,813 $ 27,945,028 $ 28,272,788 Rate Change Revenue 1,013, , ,255 UF Revenue 1,791,331 1,869,913 2,089,481 2,089,481 South Energy Center Revenue 34,670 33,019 34,670 36,404 Innovation District Revenue Surcharge Revenue 2,360,858 2,274,171 2,363,115 2,460,468 Connection Revenue 896,835 1,543,029 1,572,161 1,601,850 Other Revenue 1,025,952 1,803,286 2,190,182 2,236,339 Surcharge on Connections 127, , ,153 Interest Income 65, , , ,083 Rate Stabilization (to)/from (1,182,023) (1,825,693) (981,358) (383,324) Total Revenues 33,034,285 33,959,265 35,751,938 37,069,497 O&M Expenses: Other O&M 14,613,057 15,115,841 16,209,661 16,723,331 Total Expenses 14,613,057 15,115,841 16,209,661 16,723,331 Total Net Revenues 18,421,228 18,843,424 19,542,277 20,346,166 Uses of Net Revenues: Debt Service (Net of UPIF used for DS) 5,910,315 6,780,589 6,751,417 7,198,377 UPIF 6,758,167 6,435,338 7,042,712 7,399,641 General Fund Transfer 5,752,746 5,627,498 5,748,149 5,748,149 Total Use of Net Revenues 18,421,228 18,843,424 19,542,277 20,346,166 Net Revenue/(Deficit) $ $ $ $ B - 3

31 Flow of Funds Wastewater System Budget 2016 Projection 2016 Budget 2017 Budget 2018 Revenues: Wastewater Charges $ 34,727,627 $ 35,222,828 $ 35,295,667 $ 35,675,072 Rate Change Revenue 1,672, , ,263 South Energy Center Revenue 91,770 91,764 91,764 91,764 Innovation District Revenue Biosolids Revenue 300, , , ,000 Surcharge Revenue 2,725,361 2,626,505 2,708,413 2,817,260 Connection Revenue 1,976,058 3,150,610 3,213,960 3,278,509 Other Revenue 70, ,599 1,403,205 1,415,602 Surcharge on Connections 259, , ,477 Interest Income 157, , , ,381 Rate Stabilization (to)/from (688,436) (427,556) 299, ,780 Total Revenues 41,033,352 42,354,042 44,035,520 45,214,109 O&M Expenses: Other O&M 16,712,303 17,942,491 18,955,816 19,494,007 Total Expenses 16,712,303 17,942,491 18,955,816 19,494,007 Total Net Revenues 24,321,049 24,411,551 25,079,704 25,720,102 Uses of Net Revenues: Debt Service (Net of UPIF used for DS) 7,387,529 8,440,960 8,413,025 8,709,335 UPIF 9,337,059 8,934,097 9,432,248 9,776,337 General Fund Transfer 7,596,461 7,036,494 7,234,430 7,234,430 Total Use of Net Revenues 24,321,049 24,411,551 25,079,704 25,720,102 Net Revenue/(Deficit) $ $ $ $ B - 4

32 Flow of Funds Gas System Budget 2016 Projection 2016 Budget 2017 Budget 2018 Revenues: Residential Revenue $ 7,119,375 $ 7,154,854 $ 7,817,427 $ 7,899,315 Residential Rate Change Revenue 338, , ,918 Non Residential Revenue 4,363,621 4,624,834 4,347,392 4,382,876 Non Residential Rate Change Revenue 207, , ,945 MGPCRF Revenue 1,192,663 1,095,368 1,193,632 1,204,028 Purchased Gas Adjustment Revenue 8,407,472 7,432,106 7,696,897 11,963,422 Surcharge Revenue 471, , , ,725 Other Revenue 995,596 1,567,455 2,305,849 2,352,777 Interest Income 90, , ,792 90,117 Rate Stabilization (to)/from 784,319 1,876,378 (1,099,917) (2,171,121) Total Revenues 23,969,921 24,357,142 24,009,737 27,749,002 O&M Expenses: Purchased Gas 8,407,472 7,432,106 7,696,897 11,963,422 Other O&M 6,417,594 7,635,165 7,265,415 7,425,865 Total Expenses 14,825,066 15,067,271 14,962,312 19,389,287 Total Net Revenues 9,144,855 9,289,871 9,047,425 8,359,715 Uses of Net Revenues: Debt Service (Net of UPIF used for DS) 3,891,611 4,599,844 4,592,767 4,020,157 UPIF 2,824,504 3,399,862 3,093,726 2,978,626 General Fund Transfer 2,428,740 1,290,165 1,360,932 1,360,932 Working Capital Total Use of Net Revenues 9,144,855 9,289,871 9,047,425 8,359,715 Net Revenue/(Deficit) $ $ $ $ B - 5

33 Flow of Funds GRUCom Budget 2016 Projection 2016 Budget 2017 Budget 2018 Revenues: Telecommunications Revenue $ 7,547,844 $ 7,494,448 $ 7,610,821 $ 7,819,233 Public Safety Radio Revenue 1,801,655 1,736,265 1,781,119 1,790,024 Tower Lease Rental Revenue 1,731,236 1,752,138 1,688,047 1,713,367 Other Income 386, , ,931 Interest Income 34,024 92,997 (620) 194 Rate Stabilization (to)/from (952,193) 256, ,616 1,132,703 Total Revenues 10,162,565 11,718,697 12,049,327 12,638,453 O&M Expenses: Other O&M 6,277,059 7,831,574 7,752,789 8,120,583 Total 6,277,059 7,831,574 7,752,789 8,120,583 Total Net Revenues 3,885,506 3,887,123 4,296,538 4,517,870 Uses of Net Revenues: Debt Service (Net of UPIF used for DS) 3,761,818 3,678,084 3,677,258 3,691,300 UPIF 123, , , ,523 General Fund Transfer 376, ,047 Working Capital Total Use of Net Revenues 3,885,506 3,887,123 4,296,538 4,517,870 Net Revenue/(Deficit) $ $ $ $ B - 6

34 Section C Revenues

35 Revenues Electric System Budget 2016 Projection 2016 Budget 2017 Budget 2018 Revenues: Residential Revenue $ 45,700,464 $ 47,231,132 $ 47,968,381 $ 48,292,570 Residential Rate Change Revenue 965,851 Non Residential Revenue 64,518,143 65,463,724 66,573,688 67,660,151 Non Residential Rate Change Revenue 1,353,203 Sales for Resale 3,934,461 3,451,926 3,372,509 3,301,911 South Energy Center Revenue 10,845,560 10,834,656 11,122,588 16,002,032 Innovation Square Revenue 182, , , ,000 Fuel Adjustment Revenue 158,305, ,511, ,980, ,187,660 Surcharge Revenue 3,010,596 3,005,335 3,113,562 3,217,223 Interchange Revenue Other Revenue 14,692,706 17,902,438 8,794,042 8,990,521 Interest Income 973, ,739 1,176, ,255 Rate Stabilization (to)/from (2,785,973) 3,041,315 9,813,458 3,084,341 Total $ 299,377,401 $ 299,616,648 $ 306,105,468 $ 314,291,717 Description Forecasts were developed from econometric models that project number of customers and usage per customer for each major billing class. External inputs used in these models were sourced from the Bureau of Economic and Business Research (demographics), IHS Global Insight (economics), and the National Oceanic and Atmospheric Administration (climate). Revenue projections are the product of number of customers, billed sales, and GRU s prevailing prices. Cumulative increases in retail revenues from proposed rate changes are shown. The South Energy Center (SEC) is a combined heat and power plant providing electricity, chilled water, steam, and the storage and delivery of medical gases to the UF Health Cancer Center. The SEC has contributed significant revenues to the Electric System since May Phase II of SEC is being completed in conjunction with the completion of the new UF Health Heart & Vascular and Neuromedical hospitals in Innovation Square is a research and business development effort of the University of Florida and is served by the Electric System. Fuel adjustment revenues collect the fuel and purchased power costs for retail and firm contract unit electricity sales. Surcharge revenues are a 10 percent charge applied to the non fuel portion of retail rates for customers outside incorporated Gainesville. Interchange revenues are capacity charges associated with Winter Park and sales made through The Energy Authority. Revenues do not include fuel and variable O&M production costs. Other Revenue includes late fees and other miscellaneous service charges. Interest Income is generated from the investment earnings for the Operating Fund, Rate Stabilization Fund, and Utility Plant Improvement Fund for each system. Rate Stabilization revenues are withdrawals from (if positive) or deposits to (if negative) financial reserve accounts. C - 1

36 Budget Highlights Projected Residential and Non Residential sales revenues for FY16 are 1.4 percent and 0.7 percent higher than originally budgeted, respectively. This is primarily the result of warmer weather during late fall and early winter that translated to higher usage levels for cooling loads not typical of these months. Residential revenues are projected to increase 1.6 percent in FY17 and 0.7 percent in FY18, not including rate change revenue. Non Residential revenues are projected to increase 1.7 percent in FY17 and 1.6 percent in FY18, exclusive of rate change revenue. FY16 is the last year for Business Partner s discounts, and we anticipate additional sales from a new hospital beginning FY18 as referenced in the electric system highlights. Revenues from Sales for Resale are slightly lower than originally budgeted because the agreement to serve the City of Alachua was restructured and the new rate is slightly lower. C - 2

37 Revenues Water System Budget 2016 Projection 2016 Budget 2017 Budget 2018 Revenues: Sales of Water $ 27,028,011 $ 28,023,813 $ 27,945,028 $ 28,272,788 Rate Change Revenue 1,013, , ,255 UF Revenue 1,791,331 1,869,913 2,089,481 2,089,481 South Energy Center Revenue 34,670 33,019 34,670 36,404 Innovation District Revenue Surcharge Revenue 2,360,858 2,274,171 2,363,115 2,460,468 Connection Revenue 896,835 1,543,029 1,572,161 1,601,850 Other Revenue 1,025,952 1,803,286 2,190,182 2,236,339 Surcharge on Connections 127, , ,153 Interest Income 65, , , ,083 Rate Stabilization (to)/from (1,182,023) (1,825,693) (981,358) (383,324) Total $ 33,034,285 $ 33,959,265 $ 35,751,939 $ 37,069,498 Description Forecasts were developed from econometric models that project number of customers and usage per customer for each major billing class. External inputs used in these models were sourced from the Bureau of Economic and Business Research (demographics), IHS Global Insight (economics), and the National Oceanic and Atmospheric Administration (climate). Revenue projections are the product of number of customers, billed sales, and GRU s prevailing prices. Revenues are obtained from retail sales to Residential and Non residential customers served by the potable water system and include monthly customer charges and usage charges (Kgal) based on metered water sales. UF Revenues represent wholesale water sales to the UF campus, which maintains its own distribution system, as well as off campus UF facilities. Cumulative increases in retail revenues from proposed rate changes are shown. The SEC, as described in the electric system, is a generation facility that became operational in 2009, and is served by the Water System. The Innovation District Infrastructure Improvement Area is a designated geographic area in which GRU is constructing Water and Wastewater System capacity improvements to meet development capacity needs. GRU is recouping this investment via Infrastructure Improvement Area (IIA) fees which are being charged to development projects constructed within this designated area. A surcharge of 25 percent is collected outside incorporated Gainesville. Connection fees are collected to recover the costs of water supply, treatment and distribution required for each new customer. There is a 25 percent surcharge on connection fees for customers outside incorporated Gainesville. Interest Income is generated from the investment earnings for the Operating Fund, Rate Stabilization Fund, and Utility Plant Improvement Fund for each system. Rate Stabilization revenues are withdrawals from (if positive) or deposits to (if negative) our financial reserve accounts. C - 3

38 Budget Highlights General Service water sales revenues for FY16 are nearly unchanged from the original budget, and are projected to be relatively flat through the next two years, not including rate change revenue. Projected FY16 revenues from sales to UF are 4 percent higher than originally budgeted due to the FY16 price increase. Projected revenues for FY17 are 12 percent higher than FY16 as the result of an increase in the forecast of water usage to reflect recent trends. Projected revenues for FY18 are the same as FY17 projections. Connection charge revenues are significantly higher than projected due to a significant increase in development activity in 2016 as compared to recent previous years as a result of the economic recovery. Development activity in 2016 has included several apartment complexes, Butler Plaza expansion, Celebration Point, UF Health Shands Medical Center expansion, and several other commercial and residential projects. Development activity and connection charge revenue are expected to remain stable in FY17 and FY18. C - 4

39 Revenues Wastewater System Budget 2016 Projection 2016 Budget 2017 Budget 2018 Revenues: Wastewater Charges $ 34,727,627 $ 35,222,828 $ 35,295,667 $ 35,675,072 Rate Change Revenue 1,672, , ,263 South Energy Center Revenue 91,770 91,764 91,764 91,764 Innovation District Revenue Biosolids Revenue 300, , , ,000 Surcharge Revenue 2,725,361 2,626,505 2,708,413 2,817,260 Connection Revenue 1,976,058 3,150,610 3,213,960 3,278,509 Other Revenue 70, ,599 1,403,205 1,415,602 Surcharge on Connections 259, , ,477 Interest Income 157, , , ,381 Rate Stabilization (to)/from (688,436) (427,556) 299, ,780 Total $ 41,033,352 $ 42,354,041 $ 44,035,520 $ 45,214,108 Description Forecasts were developed from econometric models that project number of customers and usage per customer for each major billing class. External inputs used in these models were sourced from the Bureau of Economic and Business Research (demographics), IHS Global Insight (economics), and the National Oceanic and Atmospheric Administration (climate). Revenue projections are the product of number of customers, billed quantities, and GRU s prevailing prices. Revenues are obtained from wastewater charges to residential and non residential customers served by our wastewater collection, treatment, re use and disposal system. Cumulative increases in retail revenues from proposed rate changes are shown. Wastewater is not metered. Charges for most residential customers are based on winter water consumption to avoid billing customers for irrigation and other outdoor uses that do not discharge to the Wastewater System. Non residential customers are billed based on 95 percent of water consumption each month. Customers are given the option of installing irrigation water meters, which are not included in wastewater bill calculations, as a way to manage wastewater costs. The SEC is a generation facility that became operational in 2009 and is served by the Wastewater System. The Innovation District Infrastructure Improvement Area is a designated geographic area in which GRU is constructing Water and Wastewater System capacity improvements to meet development capacity needs. GRU is recouping this investment via Infrastructure Improvement Area (IIA) fees which are being charged to development projects constructed within this designated area. Biosolids revenue is generated for the receipt, treatment, and beneficial reuse of waste residuals of other municipalities and septage haulers. A surcharge of 25 percent is collected from customers outside incorporated Gainesville. Connection charges are collected to recover the capital costs of wastewater collection and treatment required for each new customer. There is a 25 percent surcharge on connection fees for customers outside incorporated Gainesville. Interest Income is generated from the investment earnings for the Operating Fund, Rate Stabilization Fund, and Utility Plant Improvement Fund for each System. C - 5

40 Rate Stabilization revenues are withdrawals (if positive) or deposits (if negative) from our financial reserve accounts. Budget Highlights Projected revenues from wastewater billings are 3.2 percent lower than originally budgeted. This is a function of water sales tracking below last year s forecast. Going forward, revenues are projected to grow very modestly; 0.2 percent in FY17, and 1.1 percent in FY18, exclusive of rate change revenue. Connection charge revenues are significantly higher than projected due to a significant increase in development activity in 2016 as compared to previous years. Development activity in 2016 has included several apartment complexes, Butler Plaza expansion, Celebration Point, UF Health Shands Medical Center expansion, and several other commercial and residential projects. Development activity and connection charge revenue are expected to remain stable in FY17 and FY18. Surcharge revenues are directly proportional to a portion of revenues from billings, and are projected to be 3.6 percent lower than originally budgeted for FY16. The increase in revenue for FY17 and FY18 includes the impact of base rate increases. C - 6

41 Revenues Gas System Budget 2016 Projection 2016 Budget 2017 Budget 2018 Revenues: Residential Revenue $ 7,119,375 $ 7,154,854 $ 7,817,427 $ 7,899,315 Residential Rate Change Revenue 338, , ,918 Non Residential Revenue 4,363,621 4,624,834 4,347,392 4,382,876 Non Residential Rate Change Revenue 207, , ,945 MGPCRF Revenue 1,192,663 1,095,368 1,193,632 1,204,028 Purchased Gas Adjustment Revenue 8,407,472 7,432,106 7,696,897 11,963,422 Surcharge Revenue 471, , , ,725 Other Revenue 995,596 1,567,455 2,305,849 2,352,777 Interest Income 90, , ,792 90,117 Rate Stabilization (to)/from 784,319 1,876,378 (1,099,917) (2,171,121) Total $ 23,969,921 $ 24,357,142 $ 24,009,736 $ 27,749,001 Description Forecasts were developed from econometric models that project number of customers and usage per customer for each major billing class. External inputs used in these models were sourced from the Bureau of Economic and Business Research (demographics), IHS Global Insight (economics), and the National Oceanic and Atmospheric Administration (climate). Revenue projections are the product of number of customers, billed sales, and GRU s prevailing prices. Cumulative increases in retail revenues from proposed rate changes are shown. The Manufactured Gas Plant Cost Recovery Factor (MGPCRF) is a component of revenue based on therm sales. It recovers the cost of environmental clean up at the Depot Park Manufactured Gas Plant. This cost is partially offset with insurance proceeds, with the project expected to total nearly $29 million when complete. Purchased Gas Adjustment (PGA) revenue collects for the natural gas fuel distributed to customers. Surcharge revenues are a 10 percent charge applied to the non fuel portion of retail rates for customers outside incorporated Gainesville. Other Revenue typically includes late fees, service charges, and sales revenue from liquid propane distribution system customers. Interest Income is generated from the investment earnings for the Operating Fund, Rate Stabilization Fund, and Utility Plant Improvement Fund for each System. Rate Stabilization revenues are withdrawals from (if positive) or deposits (if negative) to financial reserve accounts. C - 7

42 Budget Highlights Residential and non residential revenues are projected to be approximately 4% lower than originally budgeted. This is the result of mild winter temperatures. Heating degree days were 25% lower than average for FY16. The long term trend for residential revenues is an increase of 1% per year, not including rate change revenue, and non residential revenues are projected to increase 0.7% per year over the forecast horizon, exclusive of rate change revenue. Corresponding with lower sales revenues for FY16, surcharge revenue is projected to be 2.7% lower than originally projected for FY16. Over the forecast horizon, surcharge revenue is projected to increase 0.9% per year, not including the impact of rate change revenue. C - 8

43 Revenues GRUCom Budget 2016 Projection 2016 Budget 2017 Budget 2018 Revenues: Telecommunications Revenue $ 7,547,844 $ 7,494,448 $ 7,610,821 $ 7,819,233 Public Safety Radio Revenue 1,801,655 1,736,265 1,781,119 1,790,024 Tower Lease Rental Revenue 1,731,236 1,752,138 1,688,047 1,713,367 Other Income 386, , ,931 Interest Income 34,024 92,997 (620) 194 Rate Stabilization (to)/from (952,193) 256, ,616 1,132,703 Total $ 10,162,565 $ 11,718,697 $ 12,049,327 $ 12,638,454 Description GRUCom Telecommunication revenues are based on historical sales trends, anticipated customer and market changes and local economic growth forecasts. Projections have been adjusted to reflect expected continued growth in Metro Ethernet based data services and a migration away from traditional SONET/TDM services. Public Safety Radio revenue projections are based on the historical trends of number of radios deployed pursuant to the billing rates established under the existing inter local agreement which is due to expire in GRUCom is currently in negotiations with subscribers to update and expand coverage of the system and the potential revenues (along with potential expenses) are not reflected in projections. Tower Lease Rental services are primarily tower space leases with Personal Wireless Communications Services (PCS) providers and co location space leases in the GRUCom Central Office. Revenues from new leases executed in recent months are included in the forecast. The tower space leases contain provisions for automatic annual rent increases, included in the projections. Interest Income is generated from the investment earnings for the Operating Fund, Rate Stabilization Fund, and Utility Plant Improvement Fund for each system. Rate Stabilization revenues are withdrawals from (if positive) or deposits to (if negative) from financial reserve accounts. Budget Highlights GRUCom fiber transport and data services continue to be in high demand by PCS providers, other carriers and local businesses. Wireless carriers are continuing to increase their data services as customer demand dictates. Expansion of the system into the neighboring communities of Hawthorne, Archer and Newberry, due to the successful award and implementation of a scalable 10 gigabit network for the School Board of Alachua County, provides further potential development growth opportunities throughout the county. GRUCom continues to receive requests from existing apartment complexes for GATOR NET services. Revenues from these new contracts are included in projections. Demand for co location space at the GRUCom Central Office continues to grow at a steady pace as more companies and agencies seek to take advantage of the security, reliability and network access benefits available there. Growth of GRUCom Internet access sales are projected to increase, driven by a combination of additional bandwidth demands from existing business C - 9

44 customers and the capture of new business customers seeking the higher level of performance, reliability and scalability provided by GRUCom fiber optic technology. GRUCom s technology exceeds the capabilities and availability of traditional broadband services offered by the local incumbent cable TV and telephone companies. Expansion of e commerce and increased adoption and use of web based hosted software, services and applications by businesses continue to increase the importance of Internet access as a mission critical component of most business operations. This trend is expected to continue to fuel growth in this product segment. GRUCom is working with a cellular carrier to design and install a small cell system in the local area. This system will provide revenue opportunities for GRUCom and the Electric department. GRUCom is delivering 1 Gigabit Gator Net Internet service to residential MDU and student housing communities. It is expected that demand for this service offering will continue to increase as housing consumers seek the benefits of fiber to the home (FTTH) technology and housing owners, developers and managers seek to improve the value and income potential of multifamily properties through the installation of all fiber, ultra fast broadband services. C - 10

45 Section D Non Labor

46 Non Labor Fuel Budget 2016 Projection 2016 Budget 2017 Budget 2018 Expenditures: Coal $ 42,039,494 $ 26,816,064 $ 29,143,156 $ 35,604,182 Natural Gas Generation 8,217,889 19,605,729 30,652,137 28,046,076 Natural Gas Customer Sales 8,407,472 7,432,106 7,696,897 11,963,422 Fuel Oil #6 #2 26,466 Purchase Power 10,377,630 15,087,033 14,005,828 13,543,364 GREC 95,375,418 88,913,429 75,145,559 80,581,538 Landfill Gas 2,295,270 2,265,004 2,352,364 2,412,500 Total Expenditures $ 166,713,173 $ 160,145,831 $ 158,995,941 $ 172,151,082 * 2016 Projections include actuals through April 2016 for fuel expense, purchase power and landfill plus updated budget for remainder of FY16 Description Coal generation is estimated to satisfy approximately 37 percent of the total system load during FY17 compared to 54 percent projected for FY16. The decrease in coal generation is due to the lower projected gas costs in FY17. Natural gas generation is estimated to satisfy 48 percent of total system load during FY17. Natural gas is also supplied directly to customers (LDC) to operate appliances within their homes and businesses. Natural gas is purchased through The Energy Authority (TEA) and transported via Florida Gas Transmission (FGT) interstate pipeline. Natural gas cost for generation and LDC will differ due to the timing and volume of usage during the year. GRU has a 30 year Power Purchase Agreement (PPA) The Gainesville Renewable Energy Center (GREC) for MW of biomass generated power. Biomass is expected to satisfy 1 percent of total system load for FY17. Power is purchased off the electric grid when customers benefit financially or if there is a need to maintain system reliability. GRU also secures short term and long term purchased power arrangements as a hedge to meet native load. GRU has a four year power sales agreement, which began January 1, 2015, for 10MW with the city of Winter Park. While this agreement increases fuel expense, it will bring additional net revenue to reduce costs for GRU customers. D - 1

47 Budget Highlights The FY16 as burned cost of coal is projected to average $2.79/MMBtu. The budgeted FY17 as burned cost of coal is $2.95/MMBtu. FY17 as burned coal price includes $2,297,195 for pebble lime and $262,952 for urea required for operation of the dry scrubber and SCR. FY17 as burned coal price also includes Fly Ash sales which are projected to generate revenues of $172,170. This is an offset to coal expenses for the fiscal year. GRU has no coal supply contract at this time. Natural gas price for FY16 are projected to average $4.22/MMBtu. Prices for FY17 are budgeted to average $3.51/MMBtu. Natural gas costs for customer sales (local distribution company or LDC) for FY16 are projected to average $3.64/MMBtu. Prices for FY17 are budgeted to average $3.73/MMBtu delivered. Expenses for power from GREC in FY17 are estimated to be $66.98 million for fixed charges, $514,096 for variable charges and $7.65 million for annual property tax assessment. D - 2

48 Non Labor Energy Supply Budget 2016 Projection 2016 Budget 2017 Budget 2018 Expenditures: Administration $ 150,000 $ 149,820 $ 180,500 $ 184,110 Safety and Training 136, , , ,554 Fuels Management 10,750 11,018 11,750 11,373 Production Assurance Support 38,200 38,200 41,600 42,432 Maintenance of Plant Kelly Plant 980, , , ,116 Maintenance of Plant Deerhaven 4,108,307 4,108,934 4,320,065 3,820,466 Maintenance of Plant Plant Outage 4,580,000 4,580,086 2,731,000 3,979,020 Power Systems Operations 163, , , ,712 Electric Environmental 124, , , ,500 Total Expenditures $ 10,292,533 $ 10,328,912 $ 8,703,353 $ 9,478,283 Description Energy Supply operates and maintains GRU s Electric Generating and Combined Heating and Power (CHP) assets. Other areas of responsibility under Energy Supply are Power Engineering, Outage Planning and Major Maintenance, Power Systems Operation, Transmission Switching, Power Marketing, Generation Planning and Fuels Management (includes procurement, transportation and risk management for both the electric generating and gas distribution systems.) Budget Highlights In FY17, Energy Supply proposes a $1.5 million decrease to non labor expenditures, as compared to the FY16 budget. The majority of the proposed decrease in FY17 is in the Planned Outage budget: Over several years, Energy Supply has performed diagnostics and analytics required to move from a 12 month planned outage frequency to an 18 month planned outage frequency without a material increase in operational risk. This frequency reduces non labor outage costs by 25 to 30 percent over a three year period. Savings over the next six years from transitioning DH2 to an 18 month planned outage frequency are expected to be approximately $5 million. D - 3

49 Non Labor District Energy Budget 2016 Projection 2016 Budget 2017 Budget 2018 New Business Services $ 43,950 $ 39,826 $ 40,950 $ 30,950 South Energy Center 2,295,705 2,498,217 2,911,367 3,980,557 Innovation Energy Center 186, , , ,750 Total Expenditures $ 2,525,665 $ 2,723,843 $ 3,139,067 $ 4,340,257 Description District Energy develops, operates and maintains GRU s special purpose energy and thermal plants at the SEC and the Innovation Energy Center. District Energy also evaluates and implements new energy and thermal business ventures for GRU. Budget Highlights Expenses related to the SEC are in accordance with the contractual terms of the agreement between GRU and UF Health. Increased expenses at the SEC in FY17 and FY18 reflect the expansion of the SEC to serve the new UF Health Heart & Vascular and Neuromedicine Hospitals. Innovation Energy Center expenses reflect chilled water and backup power production sales as the Gainesville Innovation District develops. D - 4

50 Non Labor Energy Delivery Budget 2016 Projection 2016 Budget 2017 Budget 2018 Expenditures: Energy Delivery Administration $ 24,709 $ 17,770 $ 21,670 $ 21,674 Work and Resource Management 325, , , ,471 Electric Transmission and Distributio 2,820,384 3,172,984 3,345,467 3,407,180 Energy Delivery Engineering 288, , , ,819 Substation and Relay Operations 472, , , ,722 Gas and Electric Measurement 272, , , ,382 Systems Control 953, ,814 1,237,927 1,208,685 Gas Transmission and Distribution 412, , , ,200 Field Services 551, , , ,620 Total Expenditures $ 6,121,523 $ 6,326,377 $ 6,867,379 $ 6,933,753 Description The Energy Delivery Department is responsible for the design, construction, operation and maintenance of approximately 120 miles of electric transmission, 1,419 miles of electric distribution lines, 774 miles of gas distribution mains, 10 electric substations, and six natural gas gate stations. The department s other responsibilities include electric and gas metering; electric and gas system engineering; electric and gas system protection; power quality assurance; electric and gas system monitoring and control (SCADA); water, electric and gas service initiation and termination; all underground facility locates; and all meter reading. The department is responsible for compliance with federal, state and local regulations related to safety, gas operator qualification, gas pipeline integrity, electric system reliability and operation, construction standards and associated reporting requirements. Budget Highlights In response to strengthening economic conditions and the need to develop staff required to ensure business continuity, FY17 projected operating and maintenance expenses will increase, as compared with the FY16 original budget. Electric T&D has had two lead line workers promoted within the last fiscal year, three Lead Line Workers have retired (both planned and unplanned), and one line worker resigned. Within FY17, Electric T&D will promote five line workers into these vacant lead line worker positions. As a result of these promotions and additional resignations, a new class of six apprentice line workers will begin training in October 2016 (FY17). The development of these new employees into skilled workers will help ensure that the utility will be positioned to deliver high quality and reliable services in the future. Federally mandated regulatory requirements, such as the NERC Reliability and Critical Infrastructure Protection Standards, continue to generate significant upward pressure on O&M expenses, particularly within the Systems Control and Substation & Relay work groups. D - 5

51 In FY16, as part of a corporate restructuring, the Gas Marketing staff was transferred from the Work & Resource Management division to Business Services. In FY17 the GIS and Standards group will be transferred from Energy Delivery Engineering to Work and Resource Management along with all associated O&M expenses. These transfers resulted in a decrease in the O&M non labor expenses of Energy Delivery Engineering and Work and Resource Management for FY17 and FY18. D - 6

52 Non Labor Water Budget 2016 Projection 2016 Budget 2017 Budget 2018 Expenditures: Administration $ 11,050 $ 9,106 $ 11,705 $ 12,056 Safety Training 14,664 14,028 15,102 15,555 Planning 150, , , ,267 Engineering 85,175 63,025 82,200 84,666 Murphree Plant Electric Expense 2,425,000 2,155,155 2,250,000 2,363,850 Chemicals 1,624,359 1,464,643 1,646,846 1,706,551 Security Guard Service 126, , , ,870 Sludge Disposal Fees 285, , , ,550 Other 626, , , ,280 Total 5,087,437 4,685,656 4,986,846 5,193,101 Water Distribution Maintenance of Water System 279, , , ,173 Maintenance of Fleet 307, , , ,400 Other 51,381 52,429 54,425 56,058 Total 638, , , ,630 Total Expenditures $ 5,987,311 $ 5,538,609 $ 5,881,191 $ 6,114,276 Description The Water System is responsible for operating and maintaining the Murphree Water Treatment Plant, which has a treatment capacity of 54 million gallons of water per day (MGD). These responsibilities include providing safe, reliable, high quality drinking water to 71,000 customers serving 192,000 people in the Gainesville urban area at acceptable pressures and volumes. The Water System is also responsible for construction, operation and maintenance of over 1,130 miles of water transmission and distribution lines, as well as the installation and maintenance of water meters, fire hydrants and backflow prevention devices. Budget Highlights Most of the O&M expenses in the Water System are not discretionary. For example, in order to meet federal and state safe drinking water standards, certain energy usage, chemicals, processes, and certified operational personnel for water treatment and transmission and distribution are required. Overall, the Water System proposes a $106,120 decrease from FY16 original budget to FY17. The savings are achieved through reductions in operational expenses primarily consisting of electricity and chemicals. D - 7

53 Non Labor Wastewater Budget 2016 Projection 2016 Budget 2017 Budget 2018 Expenditures: Administration $ 11,050 $ 9,106 $ 11,705 $ 12,056 Safety Training 14,664 14,028 15,102 15,555 Planning 9,520 11,047 16,277 16,766 Engineering 85,675 63,524 82,700 85,181 Water Reclamation Facilities Electric Service 3,027,000 2,927,056 2,620,000 2,700,000 Water Service 22,700 36,284 32,000 34,000 Chemicals 983, , , ,000 Maintenance Plant & Fleet 1,009,692 1,669,272 2,122,000 2,198,000 Other 1,411, , , ,000 Total 6,454,592 6,354,245 6,605,000 6,844,000 Wastewater Collection Maintenance of Fleet 405, , , ,600 Radio and Communication Service 20,475 20,475 20,475 21,089 Other 160, , , ,411 Total 585, , , ,100 Total Expenditures $ 7,161,276 $ 6,927,039 $ 7,294,959 $ 7,554,658 Description The Wastewater System operates and maintains 14.9 million gallons of water per day (MGD) at Kanapaha Water Reclamation Facility, 7.5 MGD at Main Street Water Reclamation Facility, 168 lift stations, 631 miles of gravity main and 139 miles of associated force main, providing service to 63,000 customers in the Gainesville urban area. Responsibilities include pumping, treating and discharging high quality treated effluent that meets federal and state drinking water standards, and providing high quality reclaimed water to residential and business customers, primarily for irrigation. The Wastewater System also administers the utility s Industrial Pretreatment Program (IPP), biosolids disposal, fats, oils and greases (FOG) disposal, and reclaimed water programs. Budget Highlights Most of the O&M expenses in the Wastewater System are not discretionary. For example, in order to meet federal and state collection, treatment, effluent and disposal standards, certain chemicals, processes and certified operational personnel are required. Wastewater proposes an overall $133,683 increase to its FY16 original budget to FY17. The proposed increases are for expenses related to the operation and maintenance of the new Sweetwater Wetlands Park and the new biosolids dewatering facility at the Kanapaha Water Reclamation Facility. D - 8

54 Non Labor GRUCom Budget 2016 Projection 2016 Budget 2017 Budget 2018 Expenditures: Operations $ 898,775 $ 1,030,338 $ 1,040,385 $ 1,173,334 Public Safety Radio 561, , , ,092 Professional Services 135, , , ,150 Circuits 1,245,000 1,099,846 1,170,000 1,193,400 Total Expenditures $ 2,839,775 $ 2,824,543 $ 3,045,885 $ 3,317,976 Description GRUCom s four basic product lines include Telecommunications (data transport and carrier services), Public Safety Radio, Tower and Colocation leasing, and internet access. Budget Highlights GRUCom expenditures reflect the ongoing costs to operate and maintain the fiber optic network and the equipment used to provide data transport, carrier services, and Internet access. Operations costs are associated with network expansion for new growth (revenue) and support of existing services. Projections include increased costs for annual maintenance service agreements. GRUCom is currently in negotiations with subscribers to update and expand coverage of the system and the potential expenses (along with potential revenues) are not reflected in projections. Professional Services expenditures reflect costs associated with utilizing external sources to assist with ongoing business, product and service development with the cellular, long distance transport and other telecommunication organizations that provide internet services and peering relationships. Expenditures for circuits are associated with backbone internet access and transport connectivity purchased by GRUCom from other service providers. These circuits allow GRUCom to sell Internet access and data transport services to customers who are not in close proximity to GRUCom s fiber network. D - 9

55 Non Labor Administration Budget 2016 Projection 2016 Budget 2017 Budget 2018 Expenditures: General Manager $ 452,244 $ 443,146 $ 534,100 $ 546,550 Utilities Legal Services 26,841 20, , ,052 Community Relations 43, , , ,747 Compliance 3,980 47,448 46,780 8,599 Total Expenditures $ 526,522 $ 623,328 $ 995,751 $ 1,004,948 Description The General Manager is responsible for all aspects of the combined utility systems Electric, Gas, Water, Wastewater and GRUCom as well as the annual budget, policy recommendation, and the implementation of policies adopted by the City Commission. Utilities/Legal Services is part of the City Attorney s Office and provides daily legal counsel for the combined utility systems. Community Relations develops, implements, manages and evaluates more than 13 community outreach programs for the combined utility systems. Additionally, Community Relations is responsible for the utility s community partnerships, community charitable investments, and government relations. Compliance is responsible for the management of the Electric System s compliance with North American Electric Reliability Corporation (NERC) regulatory requirements. This requires monitoring conformance to NERC standards for system reliability and security under authority delegated by the Federal Energy Regulatory Commission. Budget Highlights The Administration FY17 budget is increasing from prior years. Factors in the increase include the addition of a corporate safety program, increased costs of memberships in organizations, and travel and training funds for the newly created Utility Advisory Board. D - 10

56 Non Labor Customer Support Services Budget 2016 Projection 2016 Budget 2017 Budget 2018 Expenditures: Customer Operations Administration $ 1,012,773 $ 3,478,594 $ 2,440,848 $ 1,883,570 Energy and Business Services 553, , , ,573 Marketing and Communications 554, , , ,431 Facilities and Administrative Services 3,062,260 2,924,838 2,864,959 3,048,359 Business and Government Relations 113,750 91, , ,547 Total Expenditures $ 5,297,135 $ 7,554,888 $ 6,474,190 $ 6,314,479 Description Customer Support Services includes the customer call center, lobby and drive thru payment processing, billing and collections, conservation, new services, promotion of utility services, and customer and employee communications. It also includes administrative functions such as utilities purchasing and stores, mail services, land rights and real estate, facilities maintenance and security. Business and Government Relations includes gas marketing, telecommunications system, economic development and ancillary products and services for the combined utility systems. Budget Highlights There was a substantial increase in Customer Operations Administration from the Budget 2016 figure to the Projected 2016 figure. This was due almost exclusively to the need to expense SAP project costs to O&M vs. the originally anticipated capitalization of those costs. o o The SAP project accounted for $2,404,384 of the increase There was also a small increase in Customer Operations due to: $20,000 increase in Project Dox co share vs. budgeted $20,000 in contract staffing to help fill vacancies $10,000 increase in postage and mailing vs. budgeted With the exception of Customer Operations Administration and Business and Government Relations, all other departments within Customer Support Services had a decrease in their Non Labor O&M Budgets from 2016 to o o The Customer Operations Administration increase consists of the following components: Addition of a new department (105) which was created specifically for the SAP ERP project and its ongoing support for a total of $940,700 Customer Operations had an overall increase of approximately $425,000 due to: Planning for IVR enhancements to improve self service and outage reporting totaling $248,528 Change in the way third party collection charges are accounted for in the budget as it was an added cost and recovery to the customers balance and it wasn t budgeted previously. Going forward that recovery and payment to the third party collection agency needs to be budgeted for $100,000 Planning for enhancements to the customer self service web portal of $75,000 The Business & Government Relations increase consists of the following components: Addition of Gas Marketing expenses resulting from the reorganization from Energy Delivery to Business Services. No historical data is provided since the reorganization is effective in FY17. D - 11

57 Non Labor Information Technology Budget 2016 Projection 2016 Budget 2017 Budget 2018 Expenditures: Administration $ 677,024 $ 676,962 $ 3,341,830 $ 3,442,574 Infrastructure Services 1,983,467 1,983, , ,500 Application Development 179, , , ,694 Business Operations Support Services 1,181,147 1,428, , ,125 IT Project Management Office 79,145 79,145 Total Expenditures $ 4,020,773 $ 4,267,161 $ 4,116,080 $ 4,379,039 Description Information Technology (IT) maintains the network, phone, server, storage, and data center infrastructure and provides IT and communication services for the combined utilities and General Government. IT supports over 2,100 users and approximately 2,500 desktop and laptop computers used by employees at over 30 locations. In addition, IT supports mission critical systems such as the SAP financial management and customer care systems, the Advantage HR, payroll, General Government s financial system, multiple websites, and various revenue collection systems. Budget Highlights The IT budget is composed of major expenditures relating to the maintenance of mission critical systems, implementing infrastructure and software upgrades and network security improvements. Expenses were budgeted in three IT cost centers for ongoing application and infrastructure support and training for IT staff in order to provide the necessary support needed for GRU s Enterprise Resource Planning (ERP) system, SAP. IT and Systems Control combined personnel and effort to more effectively and efficiently support the applications and network infrastructure of Systems Control. The reimplementation of the SAP financial management and customer care systems are budgeted in Customer Support Services. D - 12

58 Non Labor Finance Budget 2016 Projection 2016 Budget 2017 Budget 2018 Expenditures: Finance $ 8,925 $ 13,752 $ 24,265 $ 23,240 Rates, Forecasting and Business Analytics 22,750 28,145 37,750 38,250 Financial Analysis and Budget 36,395 31,600 61,391 63,741 Accounting 15,822 19,049 16,121 16,605 Accounts Payable 6,781 6,401 6,780 6,983 Total Expenditures $ 90,673 $ 98,947 $ 146,307 $ 148,819 Description Finance is responsible for preparation and administration of the utility budget; cash and debt management; administration, monitoring and control of investments; accounting for the combined utility systems; and rates, forecasting, benchmarking and business process documentation. Budget Highlights The addition of budgeting a contractor for abandoned property check processing, financial software renewal and a PC and workspace for an added analyst are drivers of the change from FY16 to FY17. Additions to employee training and education in Rates, Forecasting & Business Analytics and Financial Analysis & Budget areas also contribute to the increase. D - 13

59 Non Labor Human Resources Budget 2016 Projection 2016 Budget 2017 Budget 2018 Expenditures: Travel and Training $ 39,359 $ 10,066 $ $ Professional Services Other 2,290 3,111 Total Expenditures $ 41,649 $ 13,177 $ $ Description The GRU Human Resources (HR) Department will be combined with the HR department at General Government beginning in FY17. General Government plans to increase the Joint Services charge to the utility for the HR services provided by this combined department. The Joint Services charge is budgeted in the System Expenditures department of the utility. D - 14

60 Non Labor General System Expenditures Budget 2016 Projection 2016 Budget 2017 Budget 2018 Expenditures: Insurance $ 3,933,771 $ 3,570,055 $ 2,850,184 $ 2,944,667 Joint Services Allocation 2,121,921 2,121,921 3,266,488 3,258,684 Risk Management Fees 1,782,309 1,782,309 2,000,000 2,060,000 Professional/Contractual Services 700, , , ,000 Bank/Fiscal Agent Fees 2,014,238 2,014,420 2,230,429 2,295,533 Capital to O&M 2,058, , ,479 Legal Services 450, , , ,000 Regulatory Fees/Permits 137,093 89,104 89,104 60,674 Fleet Maintenance Capitalization (995,000) 9,739 System Expenditures Capitalized (3,750,000) Pension and OPEB Bonds 1,803,163 1,803,163 1,928,552 1,986,409 Recoveries (2,728,203) (2,728,203) Uncollectible Accts 1,704,237 1,755,365 1,808,026 Other 721, , , ,721 Total $ 6,191,226 $ 14,898,328 $ 16,798,525 $ 17,063,192 Description General System Expenditures are of common benefit to all systems, such as financial audit fees, regulatory fees, fringe costs, insurance and payments to General Government for joint services rendered. Budget Highlights Insurance premiums and payments for property and liability risks are projected to be below budget in FY16 due to a decrease in the boiler plant insurance. Risk Management at General Government negotiates and selects insurers for the utility. Risk Management fees, worker s compensation and general liability are contingent on the number and amount of claims that may be settled during a given year. Joint Services Allocation represents GRU s contribution to services such as the City Commission, City Auditor, Equal Opportunity Office, and other services that are provided by General Government. This amount increases by 3 percent each year, per agreement with General Government. Beginning in FY17, General Government assumed all HR related staff at GRU and will bill the utilities share of cost through the Joint Services Allocation. Professional/Contractual Services includes the utility s financial management expenses, ratingagency monitoring, cost of service studies, pay studies and other consulting services dealing with GASB pronouncements and taxation issues. Capitalization of fleet and administrative costs has been modified to more appropriately account for expenses. Projected FY16, FY17 and FY18 reflect the implementation of these changes. Pension costs are allocated out of System Expenditures to departments as fringe benefits. Examples of Other expenditures include record retention/storage, corporate dues and memberships, and annual audit services. D - 15

61 Non Labor Debt Service Expenditures Budget 2016 Projection 2016 Budget 2017 Budget 2018 Expenditures: Senior Lien Debt Service Payment $ 55,639,720 $ 55,541,659 $ 55,064,881 $ 61,032,725 Subordinated Debt Service Payment 5,979,190 6,552,600 6,819, ,000 Total Before BABS and UPIF 61,618,910 62,094,259 61,883,881 61,892,725 BABS (Build America Bonds Subsidy) (5,263,168) (5,263,168) (5,205,735) (5,141,140) UPIF (5,000,000) (5,000,000) Effective Debt Service $ 56,355,742 $ 56,831,091 $ 51,678,145 $ 51,751,586 Description The Senior Lien Debt Service and Subordinated Debt Service Funds were established by the Amended and Restated Utilities System Revenue Bond Resolution. The amounts deposited into these funds must be used to pay outstanding senior lien or subordinated debt. The Bond Resolution requires that monthly deposits be made to the Senior Lien Debt Service and Subordinated Debt Service Funds after 1) operating and maintenance expenses and 2) required Rate Stabilization Fund transfers are paid. These monies are restricted from other uses and are held in a separate bank account by the utility s trustee. Budget Highlights GRU continues to realize reduced interest expense on the 2009 Series B Bonds and the 2010 Series B Bonds as a result of issuing these series utilizing the Build America Bonds program created under the American Recovery and Reinvestment Act of This program provides a federal subsidy for a portion of the interest cost of the 2009 Series B Bonds and the 2010 Series B Bonds. Additionally, GRU s Variable Rate Debt continues to achieve historically low rates due to GRU s excellent credit rating and low interest rates. The FY17 and FY18 budgets each include the use of $5 million of UPIF monies to pay a portion of debt service in the electric system. D - 16

62 Non Labor Utility Plant Improvement Fund Budget 2016 Projection 2016 Budget 2017 Budget 2018 Expenditures: Electric Revenue Contribution $ 24,734,721 $ 24,734,721 $ 27,046,177 $ 25,860,966 Water Revenue Contribution 2,824,504 3,399,862 3,093,726 2,978,626 Wastewater Revenue Contribution 6,758,167 6,435,338 7,042,712 7,399,641 Gas Revenue Contribution 9,337,059 8,934,097 9,432,248 9,776,337 GRUCom Revenue Contribution 123, , , ,523 Total Expenditures $ 43,778,139 $ 43,713,057 $ 46,858,096 $ 46,466,093 Description The Utility Plant Improvement Fund (UPIF) was established by the Amended and Restated Utilities System Revenue Bond Resolution. The amounts deposited into this fund can be used to pay for construction costs or for debt service on outstanding debt. This fund represents the equity that is set aside for future construction projects. If, at any time, other monies are not available for the payment of O&M expenses, then UPIF may be used for O&M expenses. Budget Highlights Per the Bond Resolution, the utility is required to deposit into UPIF at least one half of the sum of Net Revenues, including interest income but excluding non operating revenues and expenses less Senior Lien Debt Service. The decrease in FY16 deposits to UPIF are based on the revenue projection for those years. The UPIF monies represent the City s equity investment in the utility and are used to defray the costs of maintaining a capital intensive operation. Currently UPIF is used to pay a portion of the utility s construction expenses for all systems. The utility is planning to contribute equity to the capital program, lowering potentially borrowed funds by $64.75 million in FY17, and $49.3 million in FY18. D - 17

63 Non Labor General Fund Transfer Budget 2016 Projection 2016 Budget 2017 Budget 2018 Expenditures: Electric $ 19,678,113 $ 20,751,903 $ 21,094,452 $ 21,441,454 Water 5,752,746 5,627,498 5,748,149 5,748,149 Wastewater 7,596,461 7,036,494 7,234,430 7,234,430 Gas 2,428,740 1,290,165 1,360,932 1,360,932 GRUCom 376, ,047 Total Expenditures $ 35,456,060 $ 34,706,059 $ 35,814,010 $ 36,161,012 Description On April 17, 2014, a new transfer agreement was approved by the City Commission for FY15 through FY19. The transfers are projected to be $35.8 million in FY17 and $36.2 million in FY18. A portion of the calculation of the value is application of the property tax revenue received by the City from GREC toward GRU s total transfer. This value may vary from projections, yielding a slight variance from the numbers stated above. Budget Highlights The FY17 GFT is projected to be 8.6 percent of Total Revenues and FY18 is projected at 14.1 percent of Total Non Fuel Revenues. D - 18

64 Section E Labor

65 Labor Combined System Budget 2016 Projection 2016 Budget 2017 Budget 2018 Operation & Maintenance Wages & Fringes $ 49,669,296 $ 48,405,377 $ 51,943,053 $ 53,486,176 Overtime Pay 2,635,231 2,966,757 2,709,130 2,763,245 Temporary Staffing 422, , , ,721 Other Pay 1,451,358 2,175,194 1,867,990 1,826,046 Total O&M Labor 54,178,354 54,423,784 57,256,385 58,642,187 Capital Projects Wages & Fringes 20,082,080 19,381,052 18,140,063 18,556,220 Overtime Pay 778,854 1,056, , ,698 Temporary Staffing 421, , , ,402 Other Pay 586, , , ,577 Total Capital Labor 21,869,440 21,561,995 19,438,707 19,822,897 Total Wages & Fringes 69,751,376 67,786,430 70,083,116 72,042,396 Overtime Pay 3,414,084 4,023,747 3,551,405 3,622,943 Temporary Staffing 844,101 1,310, , ,123 Other Pay 2,038,232 2,864,915 2,212,744 2,131,623 Total GRU Labor $ 76,047,794 $ 75,985,779 $ 76,695,092 $ 78,465,084 Revised 2016 Proposed 2017 Proposed 2018 FTE Breakdown Managerial Professional CWA Overfills Total Positions Authorized Total Positions Filled Total Positions Vacant E - 1

66 Labor New Positions The FY Budget recommends no additional regular Full Time Equivalent (FTE) positions for the upcoming fiscal year. Deleted Positions The FY Budget recommends the deletion of two FTE positions for the upcoming fiscal year. Department FTE Position Title Title Code 143 Customer Records 1.00 Utility Billing & Customer Solutions Spec Deerhaven Plant 1.00 Production Leader New and Continuing Overfill Positions The FY Budget recommends fourteen overfill positions in both operational and administrative areas. Eleven of these FTEs are needed for attrition planning due to retirements and resignations of current incumbents. Three are for special projects that are either SAP implementation or plant maintenance in nature. Department FTE Position Title Title Code 124 IT Business Operations Support Services 1.00 Business Systems Analyst, Senior Utilities Purchasing 1.00 Purchasing Manager Stores 1.00 Supply Chain Manager Water Reclamation Facilities & Lift Stations 1.00 Water Wastewater Instrument Tech Water/ Wastewater Planning 1.00 Utility GIS Technician Water/ Wastewater Engineering 1.00 Engineer IV Energy Supply 1.00 Business Services Manager Major Maintenance Group 1.00 Power Plant Mechanic Regulatory Compliance and Lab Services 1.00 Power Plant Lab Supervisor Control Area Services 1.00 Power Systems Coordinator II Energy Delivery Engineering 1.00 Energy Delivery Facilities Specialist Supv Gas and Electric Measurement 1.00 Energy Measurement & Regulation Mgr New Business Services 1.00 Analyst General Manager 1.00 Advisor to the GM, Utilities E - 2

67 Labor The following overfill FTEs need to continue for attrition planning: One Business Systems Analyst, Senior is needed in anticipation of a pending retirement. This overfill allows the Business Operations Support area to begin an intense knowledge transfer process that includes the transition of knowledge for software system (specifically SAP) as well as business process knowledge. The transition will better position IT to sustain a healthy support and growth environment for GRU s SAP enterprise system. One Purchasing Manager is needed to allow one month of cross training prior to incumbent retirement. Training will include city procurement policies, procedures, compliance, and solicitation of bids and proposals. The department is also already constrained due to the SAP implementation commitments. The incumbent has over 30 years of service and is scheduled to retire September One Supply Chain Manager is needed to allow one month of cross training prior to incumbent retirement. This position is responsible for managerial oversite of four warehouses and applicable training will include city policies, procedures, compliance, solicitation of bids and proposals for warehouse inventory, inventory requirements, reporting, and Material Requirements Planning (MRP) operations. The department is also already constrained due to the SAP implementation commitments. The incumbent is scheduled to retire December One Water/ Wastewater Instrument Technician is needed to prepare for near retirement of current incumbent and allow knowledge transfer in a technical position that requires familiarity of treatment plant components and processes. Areas to address during overfill include: significant operational duties, calibration of electrical and control equipment, configuration and programming SCADA and communication systems, troubleshooting equipment, programmable logic controllers, variable frequency drives, specify equipment to our standards, procurement of materials and supplies, performance tests on equipment, and emergency response and stand by duty. The overfill is requested to begin in fiscal year 2017 and end no later than August One Utility GIS Technician is necessary to cross train technical duties for three months prior to current incumbent retirement. Training will focus on: GIS, CAD, training, efficiency, and productivity. One Power Plant Lab Supervisor is needed as a result of the transfer of a Power Plant Lab Supervisor to the Energy Supply Environmental Division to conduct emissions reporting as well as support upcoming MATS environmental compliance regulation. In addition, a second Power Plant Lab Supervisor incumbent will be exiting the DROP in 2017, at which time the overfill will be eliminated. One Power System Coordinator II overfill supports a combined Energy Supply and Energy Delivery organizational change. Energy Supply has taken on the responsibility of Transmission Switching which required additional personnel to perform this system function. Transmission Switching also requires the job duties be performed by NERC certified operators. Further evaluation will be performed in FY18 to determine if the PSC II overfill will be converted into a regular position. E - 3

68 Labor One Energy Delivery Facilities Specialist Supervisor is needed due to the incumbent retiring in January 2017 with 32 years experience. The overfill duration is expected to be three months for knowledge transfer of processes, policies, procedures and duties relating to design of electric and gas distribution facilities for new construction and system renewal and maintenance. One Energy Measurement and Regulation Manager is needed due to the incumbent retiring in April 2017 with 31 years experience. Overfill duration is expected to be three months for knowledge transfer of processes, policies, procedures and duties relating to substation, system protection, electric and gas measurement and electrical apparatus repair team management. One Analyst is requested for a three month duration ending in March 2017 to help maintain the accuracy and timeliness of the South Energy Center (SEC) and Innovation Energy Center (IEC) invoices which are compiled manually using several different data sources, to support the construction administration of the SEC expansion, to support the Power Systems Operations group with generation dispatch modeling, and to help maintain the timely submission of GRU s Ten year Site Plan to the Public Service Commission. One Advisor to the General Manager will continue as a long tenured employee will be retiring and has been moved into an advisory role for the purpose of working on special projects and knowledge transfer. The following overfill FTEs need to continue for special projects: One Engineer IV is needed due to current incumbent commitments to the SAP implementation project. The Water/ Wastewater Engineering Department relies on this engineer to manage utility relocations and piping infrastructure on construction projects. This overfill will continue until the current incumbent is reassigned. One Business Services Manager is needed as the incumbent is serving on the SAP project long term and anticipates retiring in The overfill will allow these managerial duties to continue to be completed in the absence of the current incumbent. This overfill will continue until the current incumbent is reassigned or retires as planned. One Power Plant Mechanic overfill has been required due to the additional field equipment needing routine preventive maintenance since the Deerhaven Unit 2 Air Quality Control System (AQCS) became operational in Initially, two Power Plant Mechanic overfill positions were added to meet the expected additional workload. Since then, Energy Supply reduced to one overfill position. In a continuous effort to reduce costs, Energy Supply has moved toward using internal resources to perform work traditionally performed by contractors. Further evaluation will be performed in FY17 to determine if the Power Plant Mechanic overfill will be converted into a regular position or if it could be deleted. E - 4

69 Labor Energy Supply Budget 2016 Projection 2016 Budget 2017 Budget 2018 Operation & Maintenance Wages & Fringes $ 13,374,397 $ 12,657,852 $ 13,334,398 $ 13,883,254 Overtime Pay 1,016,500 1,252,177 1,022,954 1,043,358 Temporary Staffing 61, , ,097 66,868 Other Pay 224, , , ,263 Total O&M Labor 14,676,010 14,730,799 14,865,765 15,399,743 Capital Projects Wages & Fringes 632, , , ,774 Overtime Pay 2, Temporary Staffing 169,000 37,406 Other Pay 9,827 10, Total Capital Labor 811, , , ,343 Total Wages & Fringes 14,007,015 13,041,477 13,569,436 14,132,028 Overtime Pay 1,016,500 1,254,845 1,023,879 1,044,283 Temporary Staffing 230, , ,097 66,868 Other Pay 233, , , ,906 Total GRU Labor $ 15,487,455 $ 15,164,510 $ 15,102,366 $ 15,650,085 Revised 2016 Proposed 2017 Proposed 2018 FTE Breakdown Managerial Professional CWA Overfills Total Positions E - 5

70 Labor District Energy Budget 2016 Projection 2016 Budget 2017 Budget 2018 Operation & Maintenance Wages & Fringes $ 676,931 $ 751,140 $ 762,768 $ 775,075 Overtime Pay 70,000 66,068 75,000 75,000 Temporary Staffing 5, Other Pay 14,742 30,686 53,090 34,312 Total O&M Labor 766, , , ,387 Capital Projects Wages & Fringes 275, , , ,627 Overtime Pay Temporary Staffing 162,262 73,320 Other Pay 8,075 8,633 18,650 9,278 Total Capital Labor 446, , , ,905 Total Wages & Fringes 952, , ,278 1,001,702 Overtime Pay 70,000 66,068 75,000 75,000 Temporary Staffing 167,280 73,568 Other Pay 22,817 39,319 71,740 43,590 Total GRU Labor $ 1,212,894 $ 1,137,061 $ 1,133,018 $ 1,120,292 Revised 2016 Proposed 2017 Proposed 2018 FTE Breakdown Managerial Professional CWA Overfills Total Positions E - 6

71 Labor Energy Delivery Budget 2016 Projection 2016 Budget 2017 Budget 2018 Operation & Maintenance Wages & Fringes $ 11,394,784 $ 10,413,693 $ 11,478,865 $ 11,789,202 Overtime Pay 445, , , ,019 Temporary Staffing 41,532 77, ,526 75,347 Other Pay 451, , , ,503 Total O&M Labor 12,333,061 11,496,763 12,471,351 12,663,071 Capital Projects Wages & Fringes 9,636,226 8,992,730 8,911,464 9,160,666 Overtime Pay 212, , , ,416 Temporary Staffing 27, ,474 69,612 70,647 Other Pay 240, , , ,652 Total Capital Labor 10,117,238 9,841,007 9,399,716 9,633,382 Total Wages & Fringes 21,031,010 19,406,423 20,390,330 20,949,868 Overtime Pay 657, , , ,436 Temporary Staffing 69, , , ,994 Other Pay 692, , , ,155 Total GRU Labor $ 22,450,299 $ 21,337,770 $ 21,871,067 $ 22,296,453 Revised 2016 Proposed 2017 Proposed 2018 FTE Breakdown Managerial Professional CWA Overfills Total Positions E - 7

72 Labor Water Budget 2016 Projection 2016 Budget 2017 Budget 2018 Operation & Maintenance Wages & Fringes $ 3,370,374 $ 3,029,218 $ 3,134,818 $ 3,313,574 Overtime Pay 567, , , ,448 Temporary Staffing 36, ,172 82,279 85,120 Other Pay 206, , , ,125 Total O&M Labor 4,181,084 3,959,296 4,080,448 4,307,268 Capital Projects Wages & Fringes 2,168,080 2,608,204 2,230,716 2,276,470 Overtime Pay 282, , , ,566 Temporary Staffing 16,841 25,218 Other Pay 89,919 56,048 20,851 24,348 Total Capital Labor 2,557,488 3,097,065 2,591,434 2,647,384 Total Wages & Fringes 5,538,454 5,637,423 5,365,534 5,590,045 Overtime Pay 850, , , ,014 Temporary Staffing 53, ,390 82,279 85,120 Other Pay 296, , , ,473 Total GRU Labor $ 6,738,572 $ 7,056,360 $ 6,671,882 $ 6,954,652 Revised 2016 Proposed 2017 Proposed 2018 FTE Breakdown Managerial Professional CWA Overfills Total Positions E - 8

73 Labor Wastewater Budget 2016 Projection 2016 Budget 2017 Budget 2018 Operation & Maintenance Wages & Fringes $ 4,585,930 $ 4,547,346 $ 4,518,729 $ 4,702,919 Overtime Pay 402, , , ,223 Temporary Staffing 37,744 38,842 80,055 87,240 Other Pay 289, , , ,166 Total O&M Labor 5,315,980 5,299,801 5,442,468 5,669,548 Capital Projects Wages & Fringes 2,677,711 2,889,120 2,548,531 2,632,710 Overtime Pay 244, , , ,791 Temporary Staffing 16,841 17,861 Other Pay 113, ,578 26,751 27,307 Total Capital Labor 3,053,040 3,296,271 2,824,901 2,916,808 Total Wages & Fringes 7,263,641 7,436,466 7,067,260 7,335,629 Overtime Pay 647, , , ,014 Temporary Staffing 54,585 56,704 80,055 87,240 Other Pay 403, , , ,473 Total GRU Labor $ 8,369,020 $ 8,596,072 $ 8,267,370 $ 8,586,356 Revised 2016 Proposed 2017 Proposed 2018 FTE Breakdown Managerial Professional CWA Overfills Total Positions E - 9

74 Labor GRUCom Budget 2016 Projection 2016 Budget 2017 Budget 2018 Operation & Maintenance Wages & Fringes $ 1,360,486 $ 2,071,377 $ 2,213,186 $ 2,251,098 Overtime Pay 35,000 84,381 52,500 52,500 Temporary Staffing 14,000 27,439 45,000 11,250 Other Pay 45,158 97,678 70,486 65,995 Total O&M Labor 1,454,644 2,280,875 2,381,172 2,380,843 Capital Projects Wages & Fringes 1,345, , , ,366 Overtime Pay 35,000 94,171 17,500 17,500 Temporary Staffing 14,000 3,103 15,000 3,750 Other Pay 45,158 27,820 23,495 21,998 Total Capital Labor 1,439,308 1,120, , ,614 Total Wages & Fringes 2,705,636 3,066,880 2,950,915 3,001,463 Overtime Pay 70, ,552 70,000 70,000 Temporary Staffing 28,000 30,543 60,000 15,000 Other Pay 90, ,498 93,981 87,993 Total GRU Labor $ 2,893,952 $ 3,401,472 $ 3,174,896 $ 3,174,457 Revised 2016 Proposed 2017 Proposed 2018 FTE Breakdown Managerial Professional CWA Overfills Total Positions E - 10

75 Labor Administration Budget 2016 Projection 2016 Budget 2017 Budget 2018 Operation & Maintenance Wages & Fringes $ 924,702 $ 962,724 $ 1,467,620 $ 1,495,145 Overtime Pay 3,110 3,133 4,164 4,201 Temporary Staffing 8, ,823 Other Pay 16,328 71,054 60,666 48,671 Total O&M Labor 952,606 1,220,734 1,532,450 1,548,017 Capital Projects Wages & Fringes 205, , , ,527 Overtime Pay 1,091 1, Temporary Staffing 2,974 63,984 Other Pay 3,057 15,959 11,156 11,175 Total Capital Labor 213, , , ,751 Total Wages & Fringes 1,130,664 1,218,221 1,794,625 1,828,672 Overtime Pay 4,201 4,231 4,201 4,251 Temporary Staffing 11, ,807 Other Pay 19,385 87,013 71,822 59,845 Total GRU Labor $ 1,165,690 $ 1,557,273 $ 1,870,649 $ 1,892,769 Revised 2016 Proposed 2017 Proposed 2018 FTE Breakdown Managerial Professional CWA Overfills Total Positions E - 11

76 Labor Customer Support Services Budget 2016 Projection 2016 Budget 2017 Budget 2018 Operation & Maintenance Wages & Fringes $ 6,183,923 $ 6,064,778 $ 7,351,257 $ 7,534,970 Overtime Pay 84,995 85,034 78,083 63,099 Temporary Staffing 176, ,289 89,720 90,360 Other Pay 64, , ,461 88,832 Total O&M Labor 6,509,984 6,429,826 7,642,521 7,777,261 Capital Projects Wages & Fringes 1,483,593 1,385,521 1,497,049 1,482,320 Overtime Pay 1,605 2,390 2,112 2,146 Temporary Staffing Other Pay 53,308 34,423 36,550 23,774 Total Capital Labor 1,538,507 1,422,334 1,535,711 1,508,239 Total Wages & Fringes 7,667,517 7,450,299 8,848,305 9,017,290 Overtime Pay 86,600 87,423 80,195 65,245 Temporary Staffing 176, ,289 89,720 90,360 Other Pay 117, , , ,605 Total GRU Labor $ 8,048,491 $ 7,852,160 $ 9,178,232 $ 9,285,500 Revised 2016 *Proposed 2017 Proposed 2018 FTE Breakdown Managerial Professional CWA Overfills Total Positions *reorganization eliminates 10 contract temporary incumbents E - 12

77 Labor Information Technology Budget 2016 Projection 2016 Budget 2017 Budget 2018 Operation & Maintenance Wages & Fringes $ 5,575,394 $ 5,696,072 $ 5,818,152 $ 5,840,416 Overtime Pay 9,900 5,427 5,896 5,896 Temporary Staffing 20,245 42, , ,035 Other Pay 118, ,967 82,009 84,992 Total O&M Labor 5,724,211 5,875,052 6,049,092 6,074,339 Capital Projects Wages & Fringes 760, , , ,420 Overtime Pay 1, Temporary Staffing 2,761 5,808 19,505 19,505 Other Pay 16,182 17,290 11,183 11,590 Total Capital Labor 780, , , ,319 Total Wages & Fringes 6,335,675 6,472,804 6,611,536 6,636,836 Overtime Pay 11,250 6,167 6,700 6,700 Temporary Staffing 23,006 48, , ,540 Other Pay 134, ,257 93,192 96,582 Total GRU Labor $ 6,504,785 $ 6,675,622 $ 6,873,968 $ 6,902,658 Revised 2016 Proposed 2017 Proposed 2018 FTE Breakdown Managerial Professional CWA Overfills Total Positions E - 13

78 Labor Finance Budget 2016 Projection 2016 Budget 2017 Budget 2018 Operation & Maintenance Wages & Fringes $ 1,611,835 $ 1,618,744 $ 1,863,260 $ 1,900,522 Overtime Pay 350 3,977 3,500 3,500 Temporary Staffing 21,000 13,839 7,500 7,500 Other Pay 17,933 39,778 26,000 26,188 Total O&M Labor 1,651,118 1,676,338 1,900,260 1,937,710 Capital Projects Wages & Fringes 714, , , ,340 Overtime Pay 150 1,704 1,500 1,500 Temporary Staffing 9,000 17,055 7,500 7,500 Other Pay 6,087 14,968 6,750 6,813 Total Capital Labor 729, , , ,152 Total Wages & Fringes 2,326,057 2,328,936 2,498,896 2,548,862 Overtime Pay 500 5,681 5,000 5,000 Temporary Staffing 30,000 30,894 15,000 15,000 Other Pay 24,019 54,746 32,750 33,000 Total GRU Labor $ 2,380,577 $ 2,420,256 $ 2,551,646 $ 2,601,862 Revised 2016 Proposed 2017 Proposed 2018 FTE Breakdown Managerial Professional CWA Overfills Total Positions E - 14

79 Labor Human Resources Budget 2016 Projection 2016 Budget 2017 Budget 2018 Operation & Maintenance Wages & Fringes $ 610,541 $ 592,434 $ $ Overtime Pay Temporary Staffing Other Pay 2,425 13,727 Total O&M Labor 612, ,161 Capital Projects Wages & Fringes 182, ,961 Overtime Pay Temporary Staffing Other Pay 724 4,100 Total Capital Labor 183, ,061 Total Wages & Fringes 792, ,396 Overtime Pay Temporary Staffing Other Pay 3,149 17,827 Total GRU Labor $ 796,060 $ 787,222 $ $ Revised 2016 *Proposed 2017 Proposed 2018 FTE Breakdown Managerial Professional CWA Overfills Total Positions *FTEs assigned to General Government; budgeting reimbursements via Joint Services. E - 15

80 Section F Capital Projects

81 Capital Projects Electric System FY17 Budget District Energy $9,970, % Other System Projects and Allocations $12,695, % Deerhaven Plant $5,245, % Substations $2,120, % Kelly Plant $1,565, % Energy Control $2,195, % Electric Distribution Construction $6,154, % Capacitors Regulators $200, % Transmission Lines $0 0.0% Revenue Metering Transformers $1,398,496 $0 3.4% 0.0% Electric Projects 2017 Substations $ 2,120,816 Transmission Lines Revenue Metering 1,398,496 Transformers Capacitors Regulators 200,000 Electric Distribution Construction 6,154,852 Energy Control 2,195,000 Kelly Plant 1,565,000 Deerhaven Plant 5,245,000 District Energy 9,970,415 Other System Projects and Allocations 12,695,184 Total Projects $ 41,544,763 F - 1

82 Electric System Energy Supply Major Projects FY17 Energy Supply s capital budget for FY17 represents a total investment of $6.81 million of which $5.24 million is allocated to the Deerhaven Generating Station account and $1.57 million is allocated to the JRK Generating Station account. The drivers for the majority of the investments are for reliability (including life cycle management) and regulatory requirements. JRK Generating Station Major Projects FY17 Controls are the largest focus for the generating units at JRK for a total of $650,000. This includes a project for life cycle replacement of JRK digital control system hardware for $400,000 to replace obsolete Block I/O. In addition there is a project to replace the current Mark V controls used on Gas Turbine 4 which are also obsolete. Also for Gas Turbine 4, $300,000 has been set aside for investment in the life extension of critical spare parts such as fuel nozzles, combustion liners and transition pieces which will need to be completed in FY17 to prepare for the Hot Gas Path Inspection of GT4 in FY18. Deerhaven Generating Station Major Projects FY17 Deerhaven 2 has the majority of the capital needs for FY17: o Deerhaven will complete the final three cells of Deerhaven Unit 2 cooling tower for $950,000. o Structural upgrades will be implemented on the SO2 dry scrubber to ensure integrity of the vessel for $900,000. o Precipitator will have wires and bottles replaced for $500,000. o The digital control system will have hardware replaced for life cycle management for $400,000. o The duct work will have expansion joints replaced that are at end of life for $350,000. o The west pulverizer will be overhauled for life cycle management for $350,000. The brine concentrator which is part of the zero liquid discharge component of our site certification will have the controls upgraded due to end of life at $250,000. District Energy Major Projects FY17 The South Energy Center (SEC) is adding electrical and chilled water capacity to support the new UF Health Heart & Vascular and Neuromedicine hospital currently under construction. GRU is investing in capital assets including a reciprocating natural gas fired engine, a backup diesel generator, a chiller, cooling towers, transformers, circuit breakers, and other ancillary equipment. The total budget for the project is $28.5 million, of which $10.1 million was budgeted in FY16. Construction on the SEC Phase II began in FY2016. GRU will continue to purchase, install, and commission equipment at the SEC in a phased approach through the end of The new hospital will open in early F - 2

83 Capital investments in the SEC are recovered from UF Health in accordance with GRU s contract with UF Health. Net revenues from the SEC flow back to GRU s electric fund, helping to provide rate relief to all GRU electric customers. Funds for the investment in the SEC were approved during the November 6, 2014 City Commission meeting. Energy Delivery Major Projects FY17 Substations and Relay is mostly focused on upgrading distribution and transmission equipment for system reliability. The McMichen High Side upgrade ($688,810) includes the transmission switches, bus work and relays. We are replacing aging transmission oil breakers ($186,356) throughout our system, power transformer tap changer upgrades ($209,272) and 40+ year old problematic insulators ($230,236) at the Kelly Substation as well. FY 2017 budget for this category is $2,120,816. An advanced metering infrastructure (AMI) pilot project (~$800,000) is being installed for the automatic retrieval of metering data. Revenue metering projects self contained ($212,180), instrument rated ($112,500), and change out and replacement project ($289,003) will be implemented as well. FY 2017 budget for this category is $1,398,496. Additions and upgrades to GRU s Backbone electrical system are required periodically to accommodate new developments, such as The Standard, Butler North and Town Center and Celebration Point. FY 2017 budget for this category is $900,000. Also associated with new residential and commercial developments are individual customers, stores, restaurants and outlets that require construction to connect them to GRU s Backbone system. FY 2017 budget for this category is $1,700,000. Proven industry wide renewal and replacement programs that either extend the life of existing infrastructure or replace defective, non operational or end of life distribution system components and facilities. Examples of renewal and replacement programs are: Infrared inspections of strategic equipment, pole inspection, treatment and replacement program, underground cable injection of older cables, replacement of underground cables, segmentation, fusing, replacement of aging underground secondary connectors and electrical clearance improvements (Basic Insulation Level BIL). FY 2017 budget for this category is $2,400,000. Relocation of existing electric facilities due to public (city, county or state) right of way conflicts due to road widening or lane addition programs. FY 2017 budget for this category is $300,000. Associated with the 750+/ electric interruptions GRU crews respond to each year are certain capital expenditures. Examples of these are the replacement of poles, conductors, transformers or house service from Acts of God or vehicle accidents. FY 2017 budget for this category is $850,000. In order to meet NERC CIP regulatory requirements, GRU s 16 substations require the design, configuration and implementation of routers/firewalls, switches and in some instances the reconfiguration of some Bulk Electric Systems (BES) Cyber assets. In addition to meeting the regulatory requirements, the new design will also serve as a platform to accommodate secure, encrypted data transport for Advanced Metering Infrastructure (AMI), Distribution Automation (DA), corporate security (IP surveillance and access control) and relay monitoring. This platform will lay the foundation for other or future advanced technologies associated with Smart Grid. FY 2017 budget for this category is $2,195,000. F - 3

84 Capital Projects Water System FY17 Budget Other System Projects and Allocations $3,222, % Water Treatment Plant $6,585, % Meters and Services Laterals $1,975, % Backflow Prevention Devices $20, % Relocation for Road Construction $495, % Transmission Distribution Extension $50, % Fire Support System Enhancements $60, % Distribution and Storage Tanks $0 0.00% Transmission and Distribution Systems $998, % Water Projects 2017 Water Treatment Plant $ 6,585,000 Distribution and Storage Tanks Transmission and Distribution Systems 998,500 Fire Support System Enhancements 60,000 Transmission Distribution Extension 50,000 Relocation for Road Construction 495,000 Backflow Prevention Devices 20,000 Meters and Services Laterals 1,975,000 Other System Projects and Allocations 3,222,229 Total Projects $ 13,405,729 F - 4

85 Water System Major Projects FY17 Electrical System Upgrade: The primary goal of this project is to address process reliability of the Murphree Water Treatment Plant (MWTP). The project will address replacement of large electrical equipment and conductors that are original to MWTP (1975). A new electrical building with new motor control centers (MCC) will be constructed along with a 1,000 kw plant engine generator set. This project will provide the reliability needed to continue to operate Gainesville s only water treatment plant for the next 40 years. Water Main Renewal and Replacement: GRU is continuing to invest in replacing galvanized and cast iron water mains throughout the service area. These efforts are designed to upgrade and rehabilitate the water system and improve water pressure. The specific areas are selected by analyzing water pressures, known pressure issues, and areas where repair work has been conducted to determine the most costeffective improvement projects. Water Meter Changeout Program: The water meter changeout program is designed to identify large and small meters with reduced accuracy or known issues to be replaced with new meters. This program more accurately measures customer water usage, therefore correcting and increasing water revenue. Utility roadway relocation projects: There are numerous projects that require water distribution lines to be relocated because they are impacted by roadway work within the public right of way to 2000 block of NW 1 st Avenue: The City of Gainesville Community Redevelopment Agency (CRA) is planning a roadway reconstruction project along the NW 1st Avenue from NW 16th Street to NW 20th Street. As part of this project GRU will be removing the existing 2 inch water main and replacing the water main with a larger diameter 6 inch main to provide additional capacity for future development along this corridor. In addition GRU will be adjusting water valve boxes, hydrants, services, and meters as needed. F - 5

86 Capital Projects Wastewater System FY17 Budget Relocations for Road Construction $650, % Service Laterals $750, % Other System Projects and Allocations $3,527, % Water Reclamation Facilities $3,895, % Gravity Collection Systems $5,073, % Force Main Systems $225, % WW Collection System Extensions $70, % Reclaimed Water Systems $705, % Lift Stations $864, % Wastewater Projects 2017 Water Reclamation Facilities $ 3,895,000 Reclaimed Water Systems 705,000 Lift Stations 864,330 WW Collection System Extensions 70,000 Force Main Systems 225,000 Gravity Collection Systems 5,073,500 Relocations for Road Construction 650,000 Service Laterals 750,000 Other System Projects and Allocations 3,527,373 Total Projects $ 15,760,203 F - 6

87 Wastewater System Major Projects FY17 GRU will continue to invest in rehabilitating aging infrastructure through trenchless technology including cured in place pipe (CIPP) commonly referred to as sliplining. This technology allows GRU to improve the existing deteriorated pipe by installing a new pipe liner inside the existing pipe. This technique reduces the cost and disruption of opening a roadway to conduct repairs or replacements on existing sanitary sewer gravity collection mains. Main Street Water Reclamation Facility (MSWRF) East Train Rehab The project consists of major rehabilitation work on the east train of the MSWRF including the replacement of the clarifier mechanism, electrical gear, control panel, PLC, upgrades to pump station, and repairs and lining of concrete structure. The east train is the oldest treatment train at the MSWRF, originally installed in the 1960s. The east clarifier has significant signs of deterioration to its mechanical components. In August 2015, one of the mechanical components of the clarifier failed in normal operation and an emergency temporary repair was made to place the basin back into service. The east clarifier has been deemed the workhorse of all of the clarifiers. MSWRF Headworks Replacement multi year project to construct a new headworks structure including the installation of new fine band screen, influent flow meter, flow transfer station, grit removal system, flow control structure, electric gear, odor control system and PLC panel. The existing MSWRF headworks facility was constructed in the 1980s. The existing equipment is past its useful life and needs to be replaced. In addition, the new centrifuge equipment installed for the Dewatering Project require finer screening facilities than currently installed to prevent maintenance issues and extend the useful life of the centrifuges. Oakmont Infiltrating Wetland Construct a 4 acre infiltrating wetland providing 1 to 2 MGD of beneficial reuse and aquifer recharge capacity. This demonstration project will convert an existing stormwater basin in the Oakmont subdivision into a combined stormwater/reclaimed water treatment system. The basin will utilize wetland vegetation to reduce nutrients from reclaimed water and stormwater and recharge it to the Floridan Aquifer. Infiltration and Inflow These projects consist of identifying areas of the gravity collection system that stormwater is entering and reinforcing the collection system to eliminate the inflow or infiltration. By identifying and eliminating these sources of inflow, we will increase available treatment capacity at the water reclamation facilities and reduce treatment costs. F - 7

88 Capital Projects Gas System FY17 Budget Gas Acquisition Cleanup $0 0.0% Services $549, % Other System Projects and Allocations $2,101, % Renewal & Replacement $180, % Regulators/Revenue Metering $42, % New Developments Distribution Mains $819, % Measuring & Regulating Station Equipment $183, % Liquid Propane $0 0.0% Meters & Regulator Installations $450, % Gas Projects 2017 Regulators/Revenue Metering $ 42,666 Meters & Regulator Installations 450,942 Liquid Propane Measuring & Regulating Station Equipment 183,524 New Developments Distribution Mains 819,329 Renewal & Replacement 180,367 Services 549,130 Gas Acquisition Cleanup Other System Projects and Allocations 2,101,793 Total Projects $ 4,327,751 F - 8

89 Gas System Major Projects FY17 Meters and associated equipment are necessary to measure industrial customer energy consumption. Aging installations are systematically and proactively renewed or replaced to promote and ensure billing accuracy. FY 2017 budget for this category is $819,329. Meters and associated equipment are necessary to measure residential and commercial customer energy consumption. Aging installations are systematically and proactively renewed or replaced to promote and ensure billing accuracy. FY 2017 budget for this category is $450,942. Measuring and regulating station projects are necessary to promote and enhance system reliability, quality of service and customer satisfaction. FY 2017 budget for this category is $183,524. System main line extensions and improvement projects are necessary to deliver service to new or existing developments. FY 2017 budget for this category is $819,329. Aging gas distribution system pipes are systematically and proactively renewed or replaced to improve system reliability, quality of service and customer satisfaction. The planned work to replace black plastic and steel piping extends throughout the core of GRU s service area. FY 2017 budget for this category is $180,367. Service lines and associated equipment are necessary to delivery service to new customers, the end users. Aging service pipes are also systematically and proactively renewed or replaced to improve system reliability, quality of service and customer satisfaction. FY 2017 budget for this category is $549,130. System expansion projects are necessary to deliver service within new residential, commercial and industrial new developments. FY 2017 budget for this category is $2,101,793. F - 9

90 Capital Projects GRUCom FY17 Budget Other System Projects and Allocations $730, % Special Projects $385, % Fiber Optic Network Expansion $2,434, % Telecommunications Projects 2017 Fiber Optic Network Expansion $ 2,434,334 Special Projects 385,000 Other System Projects and Allocations 730,503 Total Projects $ 3,549,837 F - 10